Under free-trade conditions, suppose Australia imports TV sets at a price of $100 each. Determine the free-trade equilibrium and illustrate graphically. How many TV sets will be produced, consumed, and imported?
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- 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.Describe a scenario in which a trade surplus benefits an economy and one in which a trade surplus is economy in an economy that performs poorly. What key factor or factors are making the difference in the outcome that results from a trade surplus?Occasionally, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Is this possible?
- Z and S.A are trading partners. Both produce metal ores (including lithium) and delivery trucks. Now suppose that if Zimbabwe uses all of its resources, it can produce 50,000 tons of metal ores or 100,000 delivery trucks (trading off at a constant rate). Suppose that if South Africa uses all of its resources, it can produce 20,000 tons of metal ores or 80,000 delivery trucks (trading off at a constant rate). What is the direction of the trade (who exports what to whom)? Be sure to give the opportunity costs of production of both goods for both countries.Suppose that each country decides to specialize in the production of the good un which it has the comparative advantage. by specializing, what is the total world production of the car parts and aircraft parts?In 2020, Spain had a population of 46 million and its capital stock was US$90,000 billion. The corresponding figures for Australia were 26 million and US$75,000 billion. Suppose computer-chips manufacturing is capital-intensive relative to food processing. As such, in a two-factor, two-commodity and two-country world, Australia would have exported computer-chips to Spain and imported processed foods from Spain. Do you agree? Justify your answer using an appropriate trade model
- Assume that the global economy consists of only two countries called F and G. It is said that there are only two goods, X and Y, at the same time. Below are the different combinations the two countries can each produce. Assuming that the cost of production is constant, what is the pre-trade opportunity cost of X 1 unit in Y? 1. (1) Country F: X 10 units or Y 20 units. (2) Country G: X 10 units or Y 10 units. 2. (1) Country F: X 2 units or Y 4 units. (2) Country G: X 3 units or Y 6 units. 3. (1) Country F: X 20 units or Y 5 units. (2) Country G: X 18 units or Y 2 units. 4. Among the cases presented in (1)-(3) above, which case satisfies the following conditions? Choose all State F exports good Y and imports good X (In which situations country F will export good Y and import good X.) 5. Which of the cases presented in (1)-(3) above satisfies the following conditions? Choose all Situation where trade does not occur (In which situations no trade will take place.)Now suppose that if Zimbabwe uses all of its resources, it can produce 50,000 tons of metal ores or 100,000 delivery trucks (trading off at a constant rate). Suppose that if South Africa uses all of its resources, it can produce 20,000 tons of metal ores or 80,000 delivery trucks (trading off at a constant rate). What is the direction of trade (who exports what to whom)? Be sure to give the opportunity costs of production of both goods for both countries. What is one potential price of metal ores in terms of trucks at which both Zimbabwe and South Africa would benefit from trade? Rank the autarkic prices and the world price of metal ores from lowest to highest.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. How many total units of apples and bananas will be produced in the world after trade?
- Suppose that each country currently has 140 workers and each decides to transfer some amount of labor toward its area of comparative advantage. The United States transfers 15 workers away from socks toward producing cell phones. Thailand transfers 28 workers away from cell phones toward producing socks. What will be the new total output of cell phones for both countries combined? Country # of workers needed toproduce 1,000 units- Socks # of workers needed toproduce 1,000 units- Cell Phones United States 5 workers 1 worker Thailand 7 workers 4 workers Total Production Before Trade Country Current Sock Production Current Cell Phone Production United States 14,000 70,000 Thailand 10,000 17,500 Total 24,000 87,500Assuming labor is the only resource and England has 60 man-hours (mhrs) and Portugal 180 mhrs of labor resource available for production, which country has the absolute advantage in wine? a) Portugal b) England c) Both d) Neither e) Can't tellHappyland can produce 40 tones of marshmallows or 20 tones of chocolate in a year. Friendshipland can produce 80 tones of marshmallows or 40 tones of chocolate in a year. Can these countries benefit from trade with each other based on specialization and comparative advantage? Yes No
