Microeconomics Plus Myeconlab With Pearson Etext (1-Semester Access)
6th Edition
ISBN: 9780134435053
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 9, Problem 9.2.5PA
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We can conclude from the table that Spain has a comparative advantage in the production of tables. [True or False] Explain your answer.
Currently, Tomczakistan is closed to international trade and producing at the grey point (star symbol) labeled A on the graph. Suppose that
Tomczakistan is going to trade with Leightvania, a country that is relatively rich in labor and was also previously closed to international trade.
On the following graph, use the green point (triangle symbol) to indicate which way Tomczakistan will adjust its production by placing it on one of
the two black points (plus symbol). Dashed droplines will automatically extend to both axes.
(?)
LABOR-INTENSIVE GOODS
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9
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SO
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1
0
0
1
+
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+
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+
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CAPITAL-INTENSIVE GOODS
A
8
Once trade begins, the price of capital in Tomczakistan
9
10
New Production
. In Leightvania, the price of capital
Evaluate the following statement: "Canada has an absolute advantage in growing wheat. Therefore, it must have a comparative advantage in growing wheat.
Chapter 9 Solutions
Microeconomics Plus Myeconlab With Pearson Etext (1-Semester Access)
Ch. 9 - Prob. 9.1.1RQCh. 9 - Prob. 9.1.2RQCh. 9 - Prob. 9.1.3RQCh. 9 - Prob. 9.1.4PACh. 9 - Prob. 9.1.5PACh. 9 - Prob. 9.1.6PACh. 9 - Prob. 9.1.7PACh. 9 - Prob. 9.2.1RQCh. 9 - Prob. 9.2.2RQCh. 9 - Prob. 9.2.3PA
Ch. 9 - Prob. 9.2.4PACh. 9 - Prob. 9.2.5PACh. 9 - Prob. 9.2.6PACh. 9 - Prob. 9.2.7PACh. 9 - Prob. 9.2.8PACh. 9 - Prob. 9.2.9PACh. 9 - Prob. 9.3.1RQCh. 9 - Prob. 9.3.2RQCh. 9 - Prob. 9.3.3RQCh. 9 - Prob. 9.3.4RQCh. 9 - Prob. 9.3.5PACh. 9 - Prob. 9.3.6PACh. 9 - Prob. 9.3.7PACh. 9 - Prob. 9.3.8PACh. 9 - Prob. 9.3.9PACh. 9 - Prob. 9.3.10PACh. 9 - Prob. 9.3.11PACh. 9 - Prob. 9.3.12PACh. 9 - Prob. 9.3.13PACh. 9 - Prob. 9.4.1RQCh. 9 - Prob. 9.4.2RQCh. 9 - Prob. 9.4.3PACh. 9 - Prob. 9.4.4PACh. 9 - Prob. 9.4.5PACh. 9 - Prob. 9.4.6PACh. 9 - Prob. 9.4.7PACh. 9 - Prob. 9.4.8PACh. 9 - Prob. 9.4.9PACh. 9 - Prob. 9.4.10PACh. 9 - Prob. 9.4.11PACh. 9 - Prob. 9.4.12PACh. 9 - Prob. 9.4.13PACh. 9 - Prob. 9.4.14PACh. 9 - Prob. 9.4.15PACh. 9 - Prob. 9.5.1RQCh. 9 - Prob. 9.5.2RQCh. 9 - Prob. 9.5.3RQCh. 9 - Prob. 9.5.4RQCh. 9 - Prob. 9.5.5PACh. 9 - Prob. 9.5.6PACh. 9 - Prob. 9.5.7PACh. 9 - Prob. 9.5.8PACh. 9 - Prob. 9.5.9PACh. 9 - Prob. 9.5.10PA
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- The table suggests that Italy has an absolute advantage over Romania in (footweat, neither product, both products, beef) and a comparative advantage in (footweat, neither product, both products, beef). The table suggests that wages in Italy are (the sameas, higher than, lower than) in Romania. As a result of Romania’s joining the EU, employment in Romania is likely to fall in (the footwear industry, neither industry, both industries, the beef industry) . True or False: The degree of openness of the Romanian economy will not influence the mix of jobs. a)True b)Falsearrow_forwardThe table shows the maximum amount of production if all productive capacity in each country is devoted entirely to either of the two products. If each country specializes in its comparative advantage product (you have to figure out that first) and then agrees to trade 2 units of bread for 6 units of cheese, how much will Spain consume? Cheese Bread England 40 10 Spain 10 5arrow_forward3. Comparative advantage and gains from trade Consider two neighboring island countries called Bellissima and Felicidad. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Country Bellissima Felicidad Jeans Corn (Pairs per hour of labor) (Bushels per hour of labor) 8 16 5 20 Initially, suppose Bellissima uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Felicidad uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Bellissima produces 8 million pairs of jeans and 48 million bushels of corn, and Felicidad produces 15 million pairs of jeans and 20 million bushels of corn. Assume there are no other countries willing to trade goods, so in the absence of trade between these two countries, each…arrow_forward
- a) What is meant by terms of trade? b) How does a tariff on imports affect a country's terms of trade. Briefly explain (2-3 sentences expected).arrow_forwardEconomics Look at the following table comparing U.S. imports from several countries to capital/labor ratio in these countries. Suppose that the capital/labor ratio is 2.5 % in the U.S.. The evidence in the table supports the New Theory of Trade more than the Neoclossical Trade Theory. [Base your answer on the information in the table only] Canada Japan India France Hong Kong Capital/Labor (%) U.S. Imports (Million USD) 100 5.5 2.4 3 3.6 7 20 25 55 150 Agree Disagreearrow_forwardRefer to Figure 3.6, page 55. Assume that the graph depicts the U.S. domestic market for corn. How many bushels of corn, if any, will the United States export or import at a world price of $1, $2, $3, $4, and $5? Use this information to construct the U.S. export supply curve and import demand curve for corn. Suppose the only other corn-producing nation is France, where the domestic price is $4. Which country will export corn; which will import it?arrow_forward
- 3. Gains from trade Consider two neighboring island countries called Contente and Euphoria. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Contente 16 Euphoria 20 Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Euphoria uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Contente produces 8 million pairs of jeans and 48 million bushels of corn, and Euphoria produces 15 million pairs of jeans and 20 million bushels of corn. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and corn…arrow_forwardIf the United States produces 8 automobiles and Canada produces 4 automobiles and the United States produces 8 units of lumber and Canada produces 2 units of lumber, which country has comparative advantage,if any, in producing automobiles?arrow_forwardGermany can produce either 40 units of pretzels or 20 units of cars per labour hour. Canada can produce either 61 units of pretzels or 14 units of cars per labour hour. Suppose Canada follows its comparative advantage in deciding what to produce and trade with Germany at a trade price of 0.34 units of cars for one unit of pretzel. For every 5050 units of the goods that Canada produces and trades with Germany, what are the gains from trade in terms of the other goods?arrow_forward
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