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 9.3.6PA
To determine
The confusion between absolute and
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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
8
SO
01
1
0
0
1
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+
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+
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CAPITAL-INTENSIVE GOODS
A
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Once trade begins, the price of capital in Tomczakistan
9
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New Production
. In Leightvania, the price of capital
Home has a comparative advantage in wheat, and Foreign has a comparative advantage in cloth. Once trade occurs, Home produces 1,500 bushels of wheat, and Foreign produces 1,000 yards of cloth. The following table shows the amount of wheat that Home is willing to trade to acquire more cloth.
the international price of cloth is 1.5 bushels of wheat per yard, how many bushels of wheat will Home export to Foreign?
Select one:
a. 550 bushels
b. 800 bushels
c. 1,050 bushels
d. 700 bushels
***
Which of the following statements about production and trade is FALSE?
1. If a country has an absolute advantage in producing a good, then it also has the comparative advantage in the production of that
good.
II. Rich countries will generally have the comparative advantage in the production of all goods.
III. If a country has the absolute advantage in the production of a good, then this country will be made better off by specializing in
the production of that good.
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
b
C
d
Specialization and Trade Q4
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I and II only.
I, II and III.
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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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- Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces jeans will produce million pairs per week, and the country that produces corn will produce million bushels per week.arrow_forwardComment on the following statement: "The United States is more productive in most activities than are most of other countries because it has an absolute advantage in the production of most goods and services. Therefore we should restrict international trade as it only benefits other countries at the expense of the United States."arrow_forwardSuppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces rye will produce million bushels per month, and the country that produces jeans will produce million pairs per month.arrow_forward
- If each country specializes in the good in which it has a comparative advantage,....will gain from that trade becausearrow_forwardConsider a hypothetical world with two countries: Country A and Country B. Both countries produce computers and televisions. Assume that consumers in both countries desire both these goods and that consumers and producers cannot differentiate between computers and televisions from either country. The production in each country before trade is shown in the table below. Production before trade: Country Computer Production Television Production Country A 3,000 1,800 Country B 1,200 1,000 Total 4,200 2,800 Suppose that each country transfers some amount of resources toward its area of comparative advantage. The production in each country after the countries started trade is as follows: Production after Trade Country Computer Production Television Production Country A 4,000 1,200 Country B 600 2,000 Total 4,600 3,200 Determine the range for the quantity of computers exchanged for televisions that will benefit both countries. Note that a country will…arrow_forwarddo you think countries with distinctively different cultural, historical, and economic histories can effectively enter into a trade agreement? (at least one paragraph). Select one regional trading bloc and discuss the economic motivations for that group of countries to form an agreement. (at least one paragraph) Do you think the countries in the trading bloc you selected are likely to have cross-cultural similarities or differences? Explain. (at least one paragraph).arrow_forward
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