Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 8, Problem 7P
(a)
To determine
The
(b)
To determine
The blanks mentioned in the table.
(c)
To determine
The nation that receives better deal with respect to trade.
(d)
To determine
Whether the nations N and F would ever trade for 60 coconuts and 20 fishes.
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According to the concept of comparative advantage, a good should be
produced in that nation where:
its domestic opportunity cost is least.
money is used as a medium of exchange.
its domestic opportunity cost is greatest.
the terms of trade are maximized.
Use comparative advantage, two countries and two goods, to explain why every country can be better off from international trade.
Suppose that Vietnam has the usual demand and supply curves for producing computers while Myanmar only has a typical demand curve, but it cannot produce computers. Use the three-panel diagram described in Week 2 lecture content to: Show in a set of graphs the free-trade equilibrium for computers. Indicate the equilibrium world price. How does this world price compare to the no-trade price in Vietnam? Indicate how many computers are traded under free international trade. Make sure to state the assumptions. Show graphically and explain the effects of the shift from no trade to free trade on surpluses in each country. Indicate the net national gain or loss from no trade to free trade for each country.
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Chapter 8 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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