EBK ECONOMICS TODAY
18th Edition
ISBN: 8220100663253
Author: Miller
Publisher: PEARSON
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Question
Chapter 32, Problem aFCT
To determine
Reason for imposing regulation on U.S. trash.
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A country will be able to consume a combination of goods that is not attainable solely from domestic production if:
a.
the country avoids international trade.
b.
the country specialises in one product.
c.
the country’s domestic production value equals world relative value.
d.
the world terms of trade differ from the domestic relative costs.
e.
the world terms of trade equal the domestic relative costs.
The table above shows the daily production possibilities for China and Malaysia in producing trucks and coffee using the same amount of resources. Based on the data provided, which of the following terms of trade are mutually beneficial for the two countries?
A. 1 ton of coffee for 3 trucks
B. 1 ton of coffee for 4 trucks
C. 1 ton of coffee for 5 trucks
D. 1 truck for 1 ton of coffee
E. 1 truck for 5 ton of coffee
Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000.
(g) If the terms of trade is 2 to 1 in favour of the country with the comparative advantage in food. Determine the combination of the two goods that each country will consume after trade if the country with the comparative advantage in fuel imports 4000 units of food. Label this point B and B* respectively.
h) Who gains from trade? Who loses? What is the impact if any on the world?
(i) What should the terms of trade be to make trade beneficial for BOTH Japan and Peru? Explain.
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- The graph below shows the market for tires in the United States, a nation that is open to international trade but is assumed to be a price taker unable to affect the world price of tires. a. Using the graph above, at the world price of $80 per tire, how many tires will the United States import? _____million tires Now Suppose the U.S. government imposes a quota as shown in the graph above. b. Using this same graph, indicate the new market equilibrium with the quota imposed and the domestic quantity supplied (Qs). Instructions: Use the tools provided "New Equilibrium" and "Qs + quota" to indicate the new market price, quantity demanded, and domestic quantity supplied with this quota. c. As a consequence of this quota, how many tires will the United States import now? _____million tires How many tires will be supplied domestically? _____million tires Now suppose instead that the U.S. government imposes a quota with the goal of reducing the number of tires…arrow_forwardBased on the information from the previous graph, the absent international trade surplus is (_________). Part II. When South Africa adjusts its trade policy to allow free trade of limes, the price of one ton of limes in South Africa becomes $800. At this price, (_____)tons of limes will be demanded in South Africa, and(____)tons will be supplied by domestic suppliers. Therefore, South Africa will export(____)tons of limes. Part III. Using the info from previous tasks, complete the following to analyze the welfare effect of allowing free trade: With free trade (dollars) Consumer Surplus= Producer Surplus= WIthout free trade (dollars) Consumer Surplus= Producer Surplus=arrow_forwardPlease help, with explanations! 1. In the Pure Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then A. Both owners of K and owners of A will benefit. B. Owners of A will benefit. C. Owners of K will benefit. D. Neither owners of K nor owners of A will benefit. 2. In a Mixed Specific Factors model with two sectors, Cars (C) and Wheat (W), Capital (K) is specific to C and Land (A) is specific to W. If the government imposes a tariff on the imports of W then A. Both owners of K and owners of A will benefit. B. Owners of A will benefit. C. Owners of K will benefit. D. Neither owners of K nor owners of A will benefit.arrow_forward
- Briefly and intuitively explain why the number of varieties available to consumers after trade opens up between two countries will generally be less than the sum of varieties available in the countries before trade.arrow_forwardThe demand for cameras in a certain country is given by D=8000−30P, where P is the price of a camera. Supply by domestic camera producers is S=4000+10P. Suppose that world price of a camera is $150. If this country decides to trade, which of the following is true? Group of answer choices 3000 cameras will be exported Domestic production of cameras will decrease by 500 Domestic production of cameras will increase by 500 2000 cameras will be importedarrow_forwardSuppose there is trade between Spain and France Suppose that each produce only two goods, and that they each have $140,000 of resources to spend on the production of these goods. France• France produces one unit of oil at a cost of $5 per unit. • France can produce one unit of beef at a cost of $17 per unit. Spain• Spain produces one unit of oil at a cost of $11 per unit. • Spain produces one unit of beef at a cost of $21 per unit. a)Which country has the comparative advantage in producing oil? Which has the comparative advantage in producing beef? b)Draw the Production Possibilities Frontier (PPF) for Spain under autarky. Draw this PPF with oil on the x-axis and beef on the y-axis. Label both the x-intercept and y-intercept Suppose now that Spain and France start trading with each other at a rate of 3 units of oil for 1 unit of beef. C) Draw the Production Possibilities Frontier (PPF) for Spain under this trade agreement. D) Draw this PPF with oil on the x-axis and beef on the…arrow_forward
- Suppose that when a country opens to free trade in a good, the price of that good rises from $10 to $15. As a result, the domestic quantity supplied rises from 1,000 to 1,020 and the domestic quantity demanded falls from 1,000 to 500. What are the gains from trade? Assume linear domestic supply and demand curves.arrow_forwardSuppose a country is currently producing at a point on its production possibility frontier, and undertakes no trade with other countries. Then trade is opened up. Which of the following would not occur as a direct result?a) Its production possibility frontier would shift.b) Its production would shift to another point on its production possibility frontier.c) The pattern of products that the country produced would differ from the pattern that its consumers consumed.d) Consumers would be able to consume at a point outside the production possibility frontier. Please dont use any ai tool.arrow_forwardjust answer part c and d please thank you :) Assuming that there are only two countries in the world, Indonesia and ROW (Rest of the World) which both produce Cloth (C) and Food (F) using labor as factor production. The following table shows the number of hours of work needed to produce one unit of C and F in both countries: Cloth (C) Food (F) Indonesia 1 hour per meter 2 hour per kg ROW 6 hour per meter 3 hour per kg Please answer the followings: a. If we use the Smithian Absolute advantage, can both countries gain? Why? b. Eventually, these countries can still trade, please explain c. Please show the gains from trade for producers and consumers in both countries d. Can we see a catching up (factor price) pattern for both countries?arrow_forward
- The main advantage of trade between two countries is that A) trade makes both countries more self-sufficient. B) employment in both countries will increase. C) both countries can produce beyond their previous resource and productivity constraints. D) both countries can consume beyond their previous resource and productivity constraints.arrow_forwardJapan has an absolute advantage in both apples and computers compared to Korea. Producing a ton of apples uses 20 labour hours in Japan compared to 25 labour hours in Korea. Producing one computer requires 80 labour hours in Japan and 125 labour hours in Korea. Suppose that Japan and Korea have 40,000 and 30,000 hours of labour available to produce the two goods per month, respectively. Why does Japan specialise in computer production and Korea specialise in apple production?arrow_forward
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