With respect to international trade, specialization means that Multiple Choice each country consumes what it produces. labor is exported or imported in much the same way as other products. most goods and services that are traded internationally are produced in only 1 or 2 nations. labor and other resources in a nation are used to produce the products and services for which they are best suited.

With respect to international trade, specialization means that Multiple Choice each country consumes what it produces. labor is exported or imported in much the same way as other products. most goods and services that are traded internationally are produced in only 1 or 2 nations. labor and other resources in a nation are used to produce the products and services for which they are best suited.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter21: Economic Development

Section: Chapter Questions

Problem 13PAE

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International trade Consider an H-0 economy in which there are two countries (US and France), two goods (wine and cheese) and two factors(capital and labor). Q1: Suppose an increase in the labor force in the US causes cheese production to increase. Which factor is used intensivelyin wine production? Which H-O theorem is applied to get this answer? Explain.
It has been shown that the US has comparative advantage in capital-intensive goods while China has comparative advantage in labour-intensive goods. Suppose as a result of trade the US's economy is going to grow by 30% and that of China by 40%. Based on this information, which of the following statements is correct? Group of answer choices In the US, the employers are better off while the workers are worse off as a result of trade. The US has the stronger bargaining power in the determination of the relative price after trade. Specialization means that China will produce all the capital-intensive goods. China has the stronger bargaining power in the determination of the relative price after trade.
The gravity model of international trade predicts that the trade volume between any two countries increases 1. with the distance between the countries. 2. with the GDP of the countries.
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.
In free trade, the world price of goods directly imported by China is 400 US dollars; the price of the key components of imported goods is 160 dollars. In order to protect domestic production, China has decided to impose 90 % tariff rate on imported goods and 60% tariff rate on key components of the goods. How much is the effective tariff protection rate(ERP) for the goods calculated by two methods respectively?
Import Substitution Industrialization was a key component of state-led economic growth in the postwar era in the global south. What is Import Substitution Industrialization, and what policy tools did states use to attempt it? What difficulties did countries of the Global South face in accomplishing Import Substitution Industrialization?
Assume that labor is the only factor of production and is homogenous. Further assume prices equal the cost of production. Given this information, answer the question that follows the table: N-1 N-2 Wheat(bushel/labor-hour) 6 1 Cloth (yard/labor-hour) 3 2 (a), Express Pc relative to Pw for both the N-1 and the N-2 in the absence of trade. (b) Express the limits for mutually advantageous trade in terms of Pw/Pc and Pc/Pw. (c) Assuming that, the wage rate per labor hour in the N-1 is $6 and that of N-2 is £1.8, express Pw and PC in the N-1 in terms of S and in the N-2 in terms of f, in the absence of trade. (d) Which commodity will the N-1 import and export if the exchange rate is £ 1 = $ 3. What if £ 1 = 5 0.50? What if £ 1 = $ 2? What if € 1 = $ 1?
Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. Assuming constant costs, in which product should each nation specialize? Explain why. What are the limits of the terms of trade between these two countries? How would rising costs (rather than constant costs) affect the extent of specialization and trade between these two countries?
We have export and import data of a country for the last two years. In addition, let's assume that we have the list of the most exported goods along with the countries that this country exports and imports to. How do we know if the trade pattern of this country is compatible with the comparative advantage theory? Also, what data do we need if we want to assess whether this country's trade pattern can be explained by the Hecksher-Ohlin theory?
International trade harms the owners of relatively scarce factors of production and benefit the owners of relatively abundant factors of production in a country. This is because: Group of answer choices Factors that are relatively scarce are more productive and get paid more. 2. Prices of relatively scarce factors are relatively inexpensive compared with prices of relatively abundant factors. 3. Factors that are relatively abundant are more productive and get paid more. 4. Prices of relatively scarce factors are relatively expensive in a country compared with prices of elsewhere when there is no trade.
One reason that a large share of the trade between high-income industrial economies is intra-industrytrade is becauseA) Intra-industry it is more advantageous than inter-industry tradeB) high-income industrial economies compete with each other with the same good.C) high-income industrial economies have very different factor endowments in absolute terms.D) it allows firms to take advantage of economies of scale.
International trade Consider an H-0 economy in which there are two countries (US and France), two goods (wine and cheese) and two factors(capital and labor). Q1:Suppose a decrease in the price of cheese causes a decrease in the wage rate in the US economy. Which factor is used intensively in cheese production in France? Which HO theorem is used to get this answer? Explain.