The table below shows the production of beef (in pounds) and autos of ONE worker in Argentina and in Mexico: Beef (in pounds) Autos Argentina 100 10 Мexico 40 30 1. Suppose that BEFORE TRADE (or WITHOUT TRADE) each country has 50 workers and they each allocate 25 workers for the production of beef and 25 workers for the production of autos. Find the maximum production and consumption of both goods for each country. 2. If the countries decide to engage in trade (WITH TRADE), they will specialize in the production of the good in which they have comparative advantage. In which good should Argentina specialize? How about Mexico? JUSTIFY! (To answer this question you must calculate the opportunity cost of each good for both countries and then find the country's comparative advantage). What is the WITH TRADE production of the countries? 3. If the countries decide to engage in trade the TERMS-OF-TRADE will be set at 1,500 pounds of beef for 300 autos. With this information complete the tables below (show your work!): ARG Produce Consume Gains from Trade Вeef Autos МЕX Produce Consume Gains from Trade Вeef Autos

The table below shows the production of beef (in pounds) and autos of ONE worker in Argentina and in Mexico: Beef (in pounds) Autos Argentina 100 10 Мexico 40 30 1. Suppose that BEFORE TRADE (or WITHOUT TRADE) each country has 50 workers and they each allocate 25 workers for the production of beef and 25 workers for the production of autos. Find the maximum production and consumption of both goods for each country. 2. If the countries decide to engage in trade (WITH TRADE), they will specialize in the production of the good in which they have comparative advantage. In which good should Argentina specialize? How about Mexico? JUSTIFY! (To answer this question you must calculate the opportunity cost of each good for both countries and then find the country's comparative advantage). What is the WITH TRADE production of the countries? 3. If the countries decide to engage in trade the TERMS-OF-TRADE will be set at 1,500 pounds of beef for 300 autos. With this information complete the tables below (show your work!): ARG Produce Consume Gains from Trade Вeef Autos МЕX Produce Consume Gains from Trade Вeef Autos

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 5PA

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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?
In Germany it takes three workers to make one television and four workers to make one video camera. In Poland It takes six workers to make one television and 12 workers to make one video camera. Who has the absolute advantage in the production of televisions? Who has the absolute advantage in the production of video cameras? How can you tell? Calculate the opportunity cost of producing one additional television set in Germany and In Poland. (Your calculation may involve fractions, which Is tine.) Which country has a comparative advantage in the production of televisions? Calculate the opportunity cost of producing one video camera in Germany and in Poland. Which country has a comparative advantage in the production of video cameras? In this example, is absolute advantage the same as comparative advantage, or not? In what product should Germany specialize? In what product should Poland specialize?
True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
Trade has income distribution effects. For example, suppose that because of a government-negotiated reduction in trade barriers, trade between Germany and the Czech Republic increases. Germany sells house paint to the Czech Republic. The Czech Republic sells alarm clocks to Germany. Would you expect this pattern of trade to increase or decrease jobs and wages in the paint industry in Germany? The alarm clock industry in Germany? The paint industry in Czech Republic? The alarm clock industry in Czech Republic? What has to happen for there to be no increase in total unemployment in both countries?
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 producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?
Table 33.15 shows how the average costs of production for semiconductors (the chips In computer memories) change as the quantity of semiconductors built at that factory increases. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale? If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors? 50,000 semiconductors? 30,000 semiconductors? Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.
How do trade barriers affect the average Income level in an economy?
France and Tunisia both have Mediterranean climates that are excellent for producing/harvesting green beans and tomatoes. In France it takes two hours for each worker to harvest green beans and two hours to harvest a tomato. Tunisian workers need only one hour to harvest the tomatoes but four hours to harvest green beans. Assume there are only two workers, one in each country, and each works 40 hours a week. Draw a production possibilities frontier for each country. Hint: Remember the production possibility frontier is the maximum that all workers can produce at a unit of time which, in this problem, is a week. Identify which country has the absolute advantage in green beans and which country has the absolute advantage in tomatoes. Identity which country has the comparative advantage. How much would France have to give up In terms of tomatoes to gain from trade? How much would it have to give up in terms of green beans?