Suppose that Country A's no-trade PPF is y = -2x + 40 and Country B's no-trade PPF is y = -x +30, and that both countries have the same amount of labor. Assuming that trade is now permitted between the two countries, is there a trade (with feasible trade price and trade quantities) that allows Country A to attain the bundle (10,22)?

Suppose that Country A's no-trade PPF is y = -2x + 40 and Country B's no-trade PPF is y = -x +30, and that both countries have the same amount of labor. Assuming that trade is now permitted between the two countries, is there a trade (with feasible trade price and trade quantities) that allows Country A to attain the bundle (10,22)?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter28: International Trade

Section: Chapter Questions

Problem 8P

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Suppose that Country A's no-trade PPF is y = -2x + 40 and Country B's no-trade PPF is y= -x +30, and that both countries have the same amount of labor. Assuming that trade is now permitted between the two countries, is there a trade (with feasible trade price and trade quantities) that allows Country A to attain the bundle (10,22)?
Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150. Graph Foreign’s PPF. Construct the world relative supply curve of banana. What will happen if Pa/Pb < 4/5? Graph the relative demand curve along with the relative supply curve of banana. Assume: Demand for apples/ demand for bananas =half of price of bananas/ price of apples What is the equilibrium relative price of banana?
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Q3. Suppose that country A produces two goods (a labor-intensive good X, furniture, and a capital-intensive good Y, autos) and is considering forming a free trade agreement with one of its trading partners. The future free trade agreement is opposed by labor unions in country A. Could you infer which type of country (namely, capital- or labor-abundant) country A and its trading partner are, respectively? What would happen to the two countries’ w/r ratios (the ratios of wage rate relative to capital rental rate) after the formation of the free trade agreement? Your answer:
Al has a comparative advantage as its opportunity cost of paneling is lower at 0.67 per hour as compared to Ken. Ken has a comparative advantage as the opportunity cost of producing drywall is lower at 1 hour as compared to Al. Assuming there are 10 walls to panel (10 paneling jobs) and 8 dry walls to build (8 dry wall jobs) what is the monetary savings if Ken and Al specialize in their respective comparative advantages?
Consider a two country, two goods, one factor (labor) model of international trade. Suppose home country require 1 units of labor to produce a unit of cloth and 1 unit of labor to produce a unit of wine (regardless of output levels). Foreign country requires 2 unit of labor to produce 1 unit of cloth and 1.5 units of labor to produce 1 unit of wine (regardless of output levels). (a) Which country has the comparative advantage in producing wine? Justify your answer. (b) Which country has the absolute advantage in producing wine? (c) Which country will have higher autarky price of wine in terms of cloth? (d) Suppose after trade, the international relative price settles at a level strictly between the autarky relative prices of the two countries. At the trade equilibrium, show which country will produce wine and which country will produce cloth.
Suppose countries A and B produce and consume (assuming convex preferences) apples and bananas using only labour. Unit labour cost for apples in country A are 2 and 1 in country B. Unit labour cost for bananas are 5 in country A and 4 in country B. The labour force is the same in both countries, and given by 100 in each country. Which three of the following statements are true? Each country has an absolute advantage. Allowing for international trade, the production of 100 apples and 20 bananas can occur in a global market equilibrium, but not in a market equilibria under autarky. Country A will produce apples, with or without international trade. Under autarky, the relative price for apples (price for apples/price for bananas) equals 0.4 in country A and 0.25 in country B. Country B has an absolute advantage in producing bananas. Allowing for international trade, the production of 60 apples and 40 bananas is feasible, but…
Suppose that the opportunity cost ratio for apples and oranges is 1AE =30 in Germany but 10= 2A in Japan At which of the following international eschange ratios (terms of trade) with Gemany andJapan be willing to specialize and engage in trade with each otherO10=215AO 10= 1.25AO 10=0.25AO 10=0.15A
Q)Suppose that country A using one unit of labor can produce 80 pounds of apples or 20 pounds of oranges, while country B using the same unit of labor can produce 40 pounds of apples or 15 pounds of oranges. This shows that: Group of answer choices If A and B trade, A should specialize in the production of oranges. B has an absolute advantage in the production of apples. B has a comparative advantage in the production of apples. B has a comparative advantage in the production of oranges.
I need help understanding how to solve for this question Worker Wage Time to complete 1 unit Paneling Dry Wall Al ($9/hr) 6hrs 4hrs Ken ($10/hr) 5hrs 5hrs Assuming there are 10 walls to panel (10 paneling jobs) and 8 dry walls to build (8 dry wall jobs) what is the monetary savings if Ken and Al specialize in their respective comparative advantages?
Assume that Germany has 1200 units of labor available and it can produce two goods: apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. France has a labor force of 800. France’s unit labor requirement in apple production is 5, while in banana production it is 1. Suppose that Germany does not specialize in the production of the commodity in which it has a comparative advantage but it opens up for trade at the autarky production level. Compare the welfare of the country with the case when country specializes.
Suppose there is trade between Spain and France Suppose that each produce only two goods, and that they each have $140,000 of resources to spend on the production of these goods. France• France produces one unit of oil at a cost of $5 per unit. • France can produce one unit of beef at a cost of $17 per unit. Spain• Spain produces one unit of oil at a cost of $11 per unit. • Spain produces one unit of beef at a cost of $21 per unit. a)Which country has the comparative advantage in producing oil? Which has the comparative advantage in producing beef? b)Draw the Production Possibilities Frontier (PPF) for Spain under autarky. Draw this PPF with oil on the x-axis and beef on the y-axis. Label both the x-intercept and y-intercept Suppose now that Spain and France start trading with each other at a rate of 3 units of oil for 1 unit of beef. C) Draw the Production Possibilities Frontier (PPF) for Spain under this trade agreement. D) Draw this PPF with oil on the x-axis and beef on the…