EBK INTERNATIONAL ECONOMICS
7th Edition
ISBN: 9780134523873
Author: Gerber
Publisher: YUZU
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Question
Chapter 4, Problem 2SQ
a)
To determine
Identify the capital and labor-intensive goods among bread and steel.
b)
To determine
Identify the bread exporting country.
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Check out a sample textbook solutionStudents have asked these similar questions
Q82
One region has an absolute advantage over another region in the production of good X when...
a.
The first region has a larger supply of the raw materials required to produce good X.
b.
An equal quantity of resources can produce more of good X in the first region than in the second region.
c.
The opportunity cost of one unit of X is lower in the first region than in the second region.
d.
The first region has a more productive labour force than the second.
e.
There is no demand for good X in the second region
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.
Explain your answer in up to 200 words and using a diagram
Suppose you have a team of two workers: one is a baker and one is a chef. Your baker is talented but is inexperienced. Your chef is not only an elite chef but is also faster at baking.
If your kitchen specialized according to absolute advantage, who would do the cooking? Who would do the baking?
If your kitchen specialized according to comparative advantage, who would do the cooking? Who would do the baking?
Which approach above is more efficient? Explain your answer.
Chapter 4 Solutions
EBK INTERNATIONAL ECONOMICS
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Similar questions
- Consider two countries, A and B. Assume that both countries have identical physical endowments of iron ore. In country A, any profits made from mining the iron ore are subject to confiscation by the government. While in country B, there is no such risk. How does the risk of expropriation affect the economic success of the two nations? Which nation would you think would be richer? Why? Use vocabulary learned in our textbook chapters to explain. Given your answer to the above, why is there widespread political support for government policies that expropriate resources from some groups for the sole purpose of handing them out to other groups? Consider this: How do uncontrolled ransomware attacks destabilize the rule of law?arrow_forwardIn 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. Explain your answer in up to 200 words and using a diagramarrow_forwardA producer has a comparative advantage in a good if it is the lowest opportunity cost producer of this good, even if it is not the most efficient producer of this good. True Falsearrow_forward
- Consider two competitive economies that have the same quantities of labor (L = 400) and capital (K = 400), and the same technology (A = 100). The economies of the countries are described by the following Cobb–Douglas production functions: North Economy: Y = A L.3K.7 South Economy: Y = A L.7K.3 In which economy is labor's share of income larger? Explainarrow_forward1. Suppose that the United States and Canada have the factor endowments given in Table 1 below. Table 1 ..................United States......... Canada Capital..... 80 machines ...........40 machines Labour..... 40 workers ..............80 workers a) According to the above table, which country is relatively more labor-abundant? Which country is relatively more capital-abundant? Explain your answer with working calculations and a relevant diagram. (factor abundance diagram for the countries) b) Suppose further that the production requirements for a unit of steel is 4 machines and 2 workers, and the requirement for a unit of bread is 2 machines and 4 workers. Which good, bread or steel, is relatively capital-intensive, and which good is labor-intensive? Explain your answer with a relevant diagram. (factor intensity diagram for both commodities) c) Which country would export steel? Why? Explain which trade theory that predicts such a pattern of trade.arrow_forwardIn 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 Both owners of K and owners of A will benefit. Owners of A will benefit. Owners of K will benefit. Neither owners of K nor owners of A will benefit. use the diagram to explain with itarrow_forward
- Q3. Suppose that country A produces two goods (a labor-intensive good X, furniture, and a capital-intensive good Y, autos) and is considering forming a free trade agreement with one of its trading partners. The future free trade agreement is opposed by labor unions in country A. Could you infer which type of country (namely, capital- or labor-abundant) country A and its trading partner are, respectively? What would happen to the two countries’ w/r ratios (the ratios of wage rate relative to capital rental rate) after the formation of the free trade agreement? Your answer:arrow_forwardGermany is the European Union’s largest economy. Suppose that it produces two goods: electricity and food. Electricity (e) is produced with large capital investments (C), especially in green energy, while food (f) is labour intensive (L). This means ae > af. Draw the situation described above in an Edgeworth Box. Place the origin of electricity in the south-west corner (left-bottom) and the origin of food in the north-east corner (top- right). Measure capital on the vertical axis and labour on the horizontal axis. Draw the contract curve, one isoquant for food, one isoquant for electricity and an efficient point of production.arrow_forwardIn 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. The government imposes a tariff on the imports of W then owners of A benefit. Why is this so ?arrow_forward
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