Beef 30 22 18 12 0 Beef 14 11 8 3 0 United States Mexico Vegetables 0 8 12 21 24 Vegetables 0 1 4 11 20 4. Using the numbers from the tables above, suppose the United States settles on producing 18 tons of beef and 12 tons of vegetables before any kind of trade and specialization. Mexico settles on 8 tons of beef and 4 tons of vegetables before and kind of trade and specialization. However, after trade negotiations, the United States decides to only produce beef and Mexico decides to only produce vegetables, which means the United States will produce 30 tons of beef and Mexico will produce 20 tons of vegetables. What will the outputs available be after trade if the United States exports 10 of the 30 tons of beef to Mexico and Mexico exports 15 of the 20 tons of vegetables to the United States? Do both countries gain from specialization and trade?

Beef 30 22 18 12 0 Beef 14 11 8 3 0 United States Mexico Vegetables 0 8 12 21 24 Vegetables 0 1 4 11 20 4. Using the numbers from the tables above, suppose the United States settles on producing 18 tons of beef and 12 tons of vegetables before any kind of trade and specialization. Mexico settles on 8 tons of beef and 4 tons of vegetables before and kind of trade and specialization. However, after trade negotiations, the United States decides to only produce beef and Mexico decides to only produce vegetables, which means the United States will produce 30 tons of beef and Mexico will produce 20 tons of vegetables. What will the outputs available be after trade if the United States exports 10 of the 30 tons of beef to Mexico and Mexico exports 15 of the 20 tons of vegetables to the United States? Do both countries gain from specialization and trade?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 2SCQ: Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40...

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In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?
Trade has income distribution effects. For example, suppose that because of a government-negotiated reduction in trade barriers, trade between Germany and the Czech Republic increases. Germany sells house paint to the Czech Republic. The Czech Republic sells alarm clocks to Germany. Would you expect this pattern of trade to increase or decrease jobs and wages in the paint industry in Germany? The alarm clock industry in Germany? The paint industry in Czech Republic? The alarm clock industry in Czech Republic? What has to happen for there to be no increase in total unemployment in both countries?
If trade increases world GDP by 1 per year, what is the global impact of this increase over 10 years? How does this increase compare to the annual GDP of a country like Sri Lanka? Discuss. Hint To answer this question, here are steps you may want to consider. Go to the World Development Indicators (online) published by the World Bank. Find the current level of World GDP in constant international dollars. Also, find the GDP of Sri Lanka in constant international dollars. Once you have these two numbers, compute the amount the additional increase in global incomes due to trade and compare that number to Sri Lankas GDP.
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