Principles Of Microeconomics (book With Myeconlab With Pearson Etext Access Card)
12th Edition
ISBN: 9780134435039
Author: CASE, Karl E.; Fair, Ray C.; Oster, Sharon E.
Publisher: PEARSON
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Chapter 12, Problem 2.3P
To determine
Validating the statement on pareto-efficiency.
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Emerald Island has a climate that is suited to banana production and yields 840 pounds per acre. Tropical Springs has a climate that is not well-suited for bananas and yields only 250 pounds per acre. Emerald Island has a climate that is not well-suited for mango production and yields 325 pounds per acre. Tropical Springs has a climate that is suited for mangoes and yields 950 pounds per acre. In 2018, there was no trade between Emerald Island and Tropical Springs because of high tariffs and both countries together produced huge quantities of bananas and mangoes. In 2019, tariffs were eliminated because of a new trade agreement. What is likely to happen? Can you justify the trade agreement on the basis of Pareto's efficiency? Why or why not?
Two countries decide to specialize in producing certain goods to export to other countries, and in return they import different goods from these other countries. The advantage of these exports and imports is:
Group of answer choices
the country will be able to produce at a point outside your production possibilities frontier.
the country will be able to consume at a point outside your production possibilities frontier.
the countries will be able to produce and consume at a point outside your production possibilities frontier.
the country's production possibilities frontier will shift outward.
Moving from an autarkic situation to engagement in international trade,
a.
excess demand in the country with absolute advantage should equal excess supply in the country without absolute advantage.
b.
excess supply in the country with absolute advantage should exceed excess demand in the country without absolute advantage.
c.
excess demand in the country with absolute advantage should exceed excess supply in the country without absolute advantage.
d.
excess supply in the country with absolute advantage should equal excess demand in the country without absolute advantage.
Chapter 12 Solutions
Principles Of Microeconomics (book With Myeconlab With Pearson Etext Access Card)
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