Suppose that a country has a demand function for a laptop given by P = 30 – Qa and supply function given by P= 1 Q, where Pis the market price of laptop and Qd and Q, are quantity of laptop demanded and supplied in a country, respectively. 18. If this country engages in international trade and that world price of laptop is P" = 14, will this %3D country export or import a laptop after international trade? How many units?

Suppose that a country has a demand function for a laptop given by P = 30 – Qa and supply function given by P= 1 Q, where Pis the market price of laptop and Qd and Q, are quantity of laptop demanded and supplied in a country, respectively. 18. If this country engages in international trade and that world price of laptop is P" = 14, will this %3D country export or import a laptop after international trade? How many units?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter34: Globalization And Protectionism

Section: Chapter Questions

Problem 55P: Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply...

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In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
Are the gains from international trade more likely to be relatively more important to large or small countries?
If trade increases world GDP by 1 per year, what is the global impact of this increase over 10 years? How does this increase compare to the annual GDP of a country like Sri Lanka? Discuss. Hint To answer this question, here are steps you may want to consider. Go to the World Development Indicators (online) published by the World Bank. Find the current level of World GDP in constant international dollars. Also, find the GDP of Sri Lanka in constant international dollars. Once you have these two numbers, compute the amount the additional increase in global incomes due to trade and compare that number to Sri Lankas GDP.
Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply (s) for cameras In Thailand and Japan is described by the following functions: QsT=-5+14P QsJ=-10+14P QdT=60-P QdJ=80-P P is the price measured in a common currency used in both countries, such as the Thai Baht. Compute the equilibrium price (P) and quantities in each country without trade. Now assume that free trade occurs. The free-trade price goes to 56.36 Baht. Who exports and Imports cameras and in what quantities?
Suppose eachworker in Home can produce 12wheat or 4TVs. Assume that Home has 10workers. Suppose each worker in Foreign can produce 8 wheator 2 TVs.Assume that Foreign has 20 workers.a.What is the no-trade relative price of TVs in Home and Foreign respectively?b.Which country has an absolute advantage in the production of wheat? Which country has a comparative advantage in the production of wheat?c.Use two graphs (one for Home and one for Foreign) to display production possibilities along with indifference curves and label no-trade equilibria and a trade equilibrium constructed by you. (Assume that positive quantities of both goods are consumed in both countries in all equilibria). Pick your own numbers for the relative price in the trade equilibrium and for quantities consumed in the trade and no-trade equilibria for both countries.d.What is the real wage in units of wheat in Home in the no-trade and inyour proposed trade equilibrium?e.Calculate the gains from trade for Home by…
Suppose each worker in Home can produce 12 wheat or 4 TVs. Assume that Home has 10 workers. Suppose each worker in Foreign can produce 8 wheat or 2 TVs. Assume that Foreign has 20 workers. a. What is the no-trade relative price of TVs in Home and Foreign respectively?b. Which country has an absolute advantage in the production of wheat? Whichcountry has a comparative advantage in the production of wheat?c. Use two graphs (one for Home and one for Foreign) to display productionpossibilities along with indifference curves and label no-trade equilibria and a trade equilibrium constructed by you. (Assume that positive quantities of both goods are consumed in both countries in all equilibria). Pick your own numbers for the relative price in the trade equilibrium and for quantities consumed in the trade and no-trade equilibria for both countries.d. What is the real wage in units of wheat in Home in the no-trade and in your proposed trade equilibrium?e. Calculate the gains from trade for Home…
If a nation lhat does not allow international trade insteel has a domestic price of steel lower than I heworld price, then~ the nation has a comparative a dvan ta~e in oroduc·ing steel and would become a steel exporter if ilopened up trade.h. the nation has a comparative a dvan ta~e in oroduc·ing steel and would become a steel importer if ilopened up trade.c. the nation does not have a comparative advantagein producing steel and would become a steelexporter if it opened up trade.rl. the nation does not have a comparative advantagein producing steel and would become a steelimporter if it opened up trade.
Explain how the gains from trade followfrom comparative advantage.
Draw the production possibility curve for each country using the data provided in the table. b. Which country has an absolute advantage in what product? Which country has a comparative advantage in what product? Show your work! c. Without trade, what is the price of food in terms of computers for both countries? Showyour work! d. What is the range of prices (i.e., the CPC) at which trade can occur? Also, show (a) the possible CPC for each country and (b) the possible production and consumption possibility lines for both countries after trade. Show your work!
Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producingautos?WhatistheopportunitycostofproducingonepoundofbeefinBrazil?Whatistheopportunitycost of producing one pound of beef in the United States?
Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y from foreign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and the export supply curve for good Y in Foreign country is given by: EX = PY – 40. a) What is the free trade price of good Y? Show your work. b) How many units of good Y are traded under free trade? Show your work. c) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the price of good Y that Foreign exporters receive? Show your work. d) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the price of good Y that Home consumers pay? Show your work. e) If home country imposes a specific tariff of $15 per unit of good Y imported, how many units of good Y are traded now? Show your work. f) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariff revenue? Show your work. g) Assume…