MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 20, Problem 13DQ
To determine
The off-shoring of white-collar service jobs.
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5. Suppose that the comparative-cost ratios of two products-
baby formula and tuna fish-are as follows in the hypotheti-
cal nations of Canswicki and Tunata:
Canswicki: 1 can baby formula = 2 cans tuna fish
1 can baby formula = 4 cans tuna fish
Tunata:
In what product should each nation specialize? Explain why
terms of trade of 1 can baby formula =
would be acceptable to both nations.
25 cans tuna fish
Which of the following statements about foreign trade is
correct? Choose an answer:
O 1. A good is imported if the world market price for this good is higher than the domestic
opportunity costs of producing this good.
O 2. A good is exported if the world market price for this good is lower than the domestic
opportunity costs of producing this good.
3. The levying of a domestic duty rate on an imported good increases the
producer surplus and reduces the domestic consumer surplus.
O 4. If a country has an absolute advantage in one good, it also has a comparative advantage
in that good.
O 5. A particularly productive country can have a comparative advantage in all goods.
American apparel makers complain to Congress about competition from China. Congress decides to impose either a tariff or a quota on apparel imports from China. Which policy would Chinese apparel manufacturers prefer? LO26.4 a. Tariff. b. Quota.
Chapter 20 Solutions
MACROECONOMICS W/CONNECT
Ch. 20.2 - Prob. 1QQCh. 20.2 - Prob. 2QQCh. 20.2 - Prob. 3QQCh. 20.2 - Prob. 4QQCh. 20 - Prob. 1DQCh. 20 - Prob. 2DQCh. 20 - Prob. 3DQCh. 20 - Prob. 4DQCh. 20 - Prob. 5DQCh. 20 - Prob. 6DQ
Ch. 20 - Prob. 7DQCh. 20 - Prob. 8DQCh. 20 - Prob. 9DQCh. 20 - Prob. 10DQCh. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 1RQCh. 20 - Prob. 2RQCh. 20 - Prob. 3RQCh. 20 - Prob. 4RQCh. 20 - Prob. 5RQCh. 20 - Prob. 6RQCh. 20 - Prob. 7RQCh. 20 - Prob. 8RQCh. 20 - Prob. 9RQCh. 20 - Prob. 10RQCh. 20 - Prob. 11RQCh. 20 - Prob. 12RQCh. 20 - Prob. 13RQCh. 20 - Prob. 1PCh. 20 - Prob. 2PCh. 20 - Prob. 3PCh. 20 - Prob. 4P
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- 25 20 15 10 LO 0 P a 0 O 3 (d) areas (b) + (c) + (d) + (e) (e) areas (a) + (b) + (c) + (d) e 6 b O S 9 12 15 18 25. If the free trade price is IP and this country imposes a trade tariff of $6, the loss to the economy as a result of this tariff is represented by O(a) area (a) in this graph (b) area (b) in this graph (c) areas (c) + (d) P* 21 IP D 24 Qarrow_forward3. The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade, the optimal product mix for China is alternative B and for the United States is alternative U. LO20.2 a. Are comparative-cost conditions such that the two countries should specialize? If so, what product should each produce? b. What is the total gain in apparel and chemical output that would result from such specialization? c. What are the limits of the terms of trade? Suppose that the actual terms of trade are 1 unit of apparel for 1 unit of chemicals and 4 units of apparel for 6 units of chemicals. What are the gains from specialization and trade for each nation? China Production Possibilities Product A D F Apparel (in thousands) 30 24 18 12 Chemicals (in tons) 12 18 24 30 U.S. Production Possibilities Product R T. V Apparel (in thousands) hemicals (in tons) 10 8. 4 4 8. 12 16 20 p. 579arrow_forwardFigure: Trade 1 Price $200 175 150 Domestic Supply 500 7501,000:1,300 1,150 World Supply + Tariff World Supply Domestic Demand Quantity If the world price for the good in this figure is higher than the domestic price, a move to free international trade means that the domestic economy will become: O either a net importer or a net exporter of the good, but it is impossible to say which. O a net importer of the good. neither a net importer nor a net exporter of the good. a net exporter of the good.arrow_forward
- For the large-country in the graph, the free-trade price of the product is Price $25 $20 $15 10 O $15; 10 units O $15; 30 units O $25; 10 units O $20; 30 units 20 30 40 Quantity P+t pw P and the amount imported isarrow_forwardQUESTION 22 P COUNTRY 1 25 20 15 10 5 d1 Q 0 0 3 6 9 1215182124 s1 IP INTERNATIONAL MARKET 25 20- 15 10- LO P 5 S2 P 0 0 3 6 9 1215182124Q 25 20- S1 15 IP 10 D2 5 D1 0 COUNTRY 2 ⠀⠀ 22. What is the net welfare gain from trade to the economy of country 1? (hint: the formula for calculating the area of a triangle is 1/2 times the base times the height) a) 3 b) 6 c) 9 d) 13.5 e) 18 s2 IP d2 0 3 6 9 1215182124Qarrow_forwardPortugal England 90 90 80 80 70 70 60 60 CPF 50 50 40 40 30 30 CPF PPF PPF 20 20 10 10 0 10 20 30 40 50 60 0 10 20 30 40 50 60 cloth cloth wine winearrow_forward
- The table below shows the monetary value of the production of gems and steel respectively in the calendar year of2019 for the nations of Turkey and Zimbabwe. Use it to answer questions regarding a possible trade scenario between the two nations. Year -2019 Gems in billions of USD Steel in billions of USD Zimbabwe 0.2 Turkey 10 Which of the nations has an absolute advantage in terms of the production of gems? O a Neither O b Zimbabwe Turkeyarrow_forwardQUESTION 8 25 20 15 10 LO 5 P COUNTRY 1 A+ 11 s1 |⠀⠀⠀ SP -IP d1Q 0 0 3 6 9 1215182124 INTERNATIONAL MARKET P 25 20 15 10 5 0 0 3 6 9 12 15182124 08. Under open trade, who will gain and who will lose in country 1? a) consumers gain and producers lose. b) producers gain and consumers lose. c) both producers and consumers lose. d) the poor lose and the rich gain. DE S2 ⠀⠀ FIP D2 25 20 S1 15 10 5 d2 0 0 3 6 9 1215182124 Q D1 Q P COUNTRY 2 s2 IParrow_forwardIf nation X can manufacture the same number of computers in a year as nation Y using fewer resources, nation Y has: O a comparative disadvantage. an absolute disadvantage. a mutual gain from trade. an absolute advantage.arrow_forward
- In Country A, the production of 1 bicycle requires using resources that could otherwise be used to produce 11 lamps. In Country B, the production of 1 bicycle requires using resources that could otherwise be used to produce 15 lamps. Which country has a comparative advantage in making bicycles? LO26.2 a. Country A. b. Country Barrow_forwardQ25 If country A has wages that are substantially less than those in country B, ... a. The pattern of comparative advantage will depend also on the relative productivities of labour in the two countries. b. Country A will have an absolute advantage over country B. c. Country B will import from A but will not be able to export to country A. d. Country B will benefit by placing tariffs on imports from country A. e. Country A will not have to subsidise its export industries.arrow_forwardPrice (dollars per shirt) 44 40 36 32 28 24 20 16 12 O 8 O 32 million The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt. 24 million S In the figure above, with the tariff the United States imports 8 million D O 16 million 16 24 32 40 48 56 64 Quantity (millions of shirts per year) million shirts per year.arrow_forward
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