Principles of Microeconomics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165905
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 3, Problem 5CQQ
To determine
Comparative advantage for the export of goods and services.
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Students have asked these similar questions
Suppose that in a day a worker in the United States can produce 10 bushels of corn or 2 shirts. In Russia a worker can produce 9 bushels of corn or 3 shirts in one day. Which of the following would benefit both the United States and Russia if trade occurred?
1 shirt for 6 bushels of corn
-----1 shirt for 4 bushels of corn
1 shirt for 1 bushel of corn
1 shirt for 2 bushels of corn
Im doing review for a class and I realize that 1 shirt and for bushels are the correct answer I am just confused on what formula would apply to figue this out
You are watching the nightly news. A political candidate being interviewed says, "I'm for
free trade, but it must be fair trade. If our foreign competitors will not raise their
environmental regulations, reduce subsidiaries to their export industries, and lower
tariffs on their imports of our goods, we should retaliate with tariffs and import quotas on
there goes to show them that we won't be played for fools!"
A) If a foreign country artificially lowers the cost of production for its producers with
lax environmental regulations and direct subsidiaries and then exports the
products to us, who gains and who loses in our country, producers or
consumers?
B) Continuing form part A above, does our country gain or lose? Why?
C) If a foreign country subsidizes the production of a good exported to the United
States, who bears the burden of their mistaken policy?
D) What happens to our overall economic well-being if we restrict trade with a
country that subsidizes its export industries?…
U.S.
U.K
Wheat
12
10
Cloth
8
6
The table above shows United States and United Kingdom production of wheat (bushels per hour) and cloth (yards per hour).
i.The United States has an absolute advantage in the production of both goods.
ii.The United Kingdom has a comparative advantage in the production of wheat.
iii.The opportunity cost of cloth is lower in the United States.
iv.The opportunity cost of cloth is lower in the United Kingdom.
Which one of the following is true?
a) only i, ii and iv are correct
b) Only i, ii, and iii are correct
c) Only i and ii are correct
d) Only iii is correct
Chapter 3 Solutions
Principles of Microeconomics, 7th Edition (MindTap Course List)
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Similar questions
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- Use the Graph below to answer the questions about International Trade: Price P1 P2 P3 A B D F с E D -Quantity a. At equilibrium, what area represents Consumer Surplus? Blank 1 and Blank 2. b. At equilibrium, what area represents Producer Surplus? Blank 3 and Blank 4. c. Which Price Level would make this country become an importer of this good? Blank 5 d. Which Price Level would make this country become an exporter of this good? Blank 6arrow_forwardEngland and Scotland both produce scones and sweaters. Suppose that an English works can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. a. Which country has the absolute advantage in the production of each good? Which country has the comparative advantage? b. If England and Scotland decide to trade, which commodity will Scotland trade to England? Explain. c. If a Scottish worker could produce only 1 sweater per hour, would Scotland still gain from trade? Would England still gain from trade? Explain.arrow_forwardAssume the United States is an importer of televisions and there are no trade restrictions. US consumers buy 1 million televisions per year, of which 400,000 are produced domestically and 600,000 are imported,a. Suppose that a technological advance among Japanese television manufacturers causes the world price of televisions to fall by $100. Draw a graph to show how this change affects the welfare of U.S. consumers and U.S. producers and how it affects total surplus in the United States.b. After the fall in price, consumers buy 1.2 million televisions, of which 200,000 are produced domestically and 1 million are imported. Calculate the change in consumer surplus, producer surplus, and total surplus from the price reduction. c. If the government responded by putting a $100 tariff on imported televisions, what would this do? Calculate the revenue that would be raised and the deadweight loss. Would it be a good policy from the standpoint of U.S. welfare? Who might support the policy?d.…arrow_forward
- Two countries, A and B, produce cotton and wine. The table below describes their maximum daily production of each good in kilograms for cotton and liters for wine. Maximum daily production Country A Country B Cotton 40 40 Wine 50 40 Which country has the comparative advantage in the production of a. wine? Why? b. Why? If these two countries trade, which good will each of them export? C. When trade between the two countries is not allowed, country A produces 16 kg. of cotton and 30 liters of wine and country B produces 22 kg. of cotton and 18 liters of wine. Would they agree to trade if the agreement included the following two conditions: Each produces only the good for which they have the comparative advantage They trade 17 kg of cotton for 19 liters of winearrow_forwardAn automobile company has two factories, one in Vietnam and one in Australia, each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 200 engines or 150 transmissions per day. A. Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies. B. The Australian factory has an comparative advantage in the production of transmissions. C. The Vietnamese factory has an absolute advantage producing both engines and transmissions. D. The Vietnamese factory has a comparative advantage in the production of transmissions.arrow_forwardAssume Australia is an importer of sofas and there are no trade restrictions. Australian consumers buy 1 000 000 sofas per year, of which 450 000 are produced domestically and 550 000 are imported.a Suppose that a technological advance among Swedish sofa manufacturers causes the world price of sofas to fall by $200. Draw a graph to show how this change affects the welfare of Australian consumers and Australian producers, and how it affects total surplus in Australia.b After the fall in price, Australian consumers buy 1 150 000 sofas, of which 300 000 are produced domestically and 850 000 are imported. Calculate the change in consumer surplus, producer surplus and total surplus from the price reduction.c If the government responded by putting a $200 tariff on imported sofas, what would this do? Calculate the revenue that would be raised and the deadweight loss. Would it be a good policy from the standpoint of Australian welfare? Who might support the policy?d Suppose that the fall in…arrow_forward
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