There are two states: Apple State and Banana State. There are four homogeneous goods, one factor input (labor), and unit labor requirements are given in the following table. In addition, wage rate in Apple State is $2 and that in Banana State is $3. If two states agree to trade goods freely, which product(s) will Apple State produce? Textile Fish Soybean Corn Units of labor required per unit of output Apple State Soybean and Corn Textile and Fish O Fish, Soybean and Corn O Corn 5 4 3 2 Banana State 2 2 4 4
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- Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply (s) for cameras In Thailand and Japan is described by the following functions: QsT=-5+14P QsJ=-10+14P QdT=60-P QdJ=80-P P is the price measured in a common currency used in both countries, such as the Thai Baht. Compute the equilibrium price (P) and quantities in each country without trade. Now assume that free trade occurs. The free-trade price goes to 56.36 Baht. Who exports and Imports cameras and in what quantities?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 Jeans Corn (Pairs per hour of labor) (Bushels per hour of labor) Bellissima 8 16 Felicidad 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…3. Galns from trade Consider two neighboring island countries called Felicidad and Bellissima. They each have 4 million labor hours available per week 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) Felicidad 16 Bellissima 6. 12 Initially, suppose Bellissima uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce corn, while Felicidad uses 3 million hours of labor per week to produce jeans and 1 million hours per week to produce corn. Consequently, Felicidad produces 12 million pairs of jeans and 16 million bushels of corn, and Bellissima produces 6 million pairs of jeans and 36 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…
- Question & Use the table to answer the question. Apples Bananas Country A Country B 800 500 O a O b Ос Od 1500 If all resources of Country A and Country B were dedicated toward the production of either apples or bananas, the maximum production of each is summarized in the table above. In order for both countries to benefit from trade, which country should specialize in banana productio and why? 1600 Review Answers Country A since it has the absolute advantage in banana production. Country A since it has the comparative advantage in banana production. Country B since it has the comparative advantage in banana production. Country B since it has the absolute advantage in banana production. Saved at 8:09 am Support | Schoology Blog | PRIVACY POLICY | Terms ofProduction Advantage and Opportunity CostsAssume there are two countries, the United States and France, and two goods, automobiles andcomputers.The table presented below shows the number of automobiles and computers that the United States andFrance can produce with the same amount of resources. France=100 automobiles and 55 computers United States=120 automobiles and 60 computers. 1.4 If free trade exists between the United States and France, what are the highest and lowestlevels for the price of an automobile (expressed in terms of computers)? Motivate youranswer by stating which level favours the United States and FranceQ2. The following table shows the output of textile and auto one unit of labor can produce in the U.K. and the U.S.: Textiles Autos United Kingdom 16 4 United States 12 6 Which country has an absolute advantage in textiles and which country has an absolute advantage in autos? What is the autarky price ratio of autos relative to textiles in each country? Which country has a comparative advantage in textiles and which country has a comparative advantage in autos? Which product should each country export? Suppose the United States has 150 units of labor available. Construct the production-possibilities frontier (PPF) and identify the optimal autarky equilibrium (using an indifference curve) for the United States. Suppose the international price is set at 1 auto:3 textile and the U.S. decides to completely specialize in producing the product in which it has a comparative advantage. How would the above graph change? Use the graph to show the gains from trade…
- Consider two neighboring island countries, Charisma and Fiatstan. Each has 72,000 labor hours available per week that it can use to produce corn, jeans, or a combination of both. The following table shows the amount of labor hours required to produce 1 bushel of com or 1 pair of jeans. Corn Jeans Country (Labor hours per bushel) (Labor hours per pair) Charisma 80 16 Fiatstan 24 12 has an absolute advantage in the production of corn, and has an absolute advantage in the production of jeans. Initially, suppose Charisma uses 54,000 hours of labor per week to produce corn and 18,000 hours per week to produce jeans, while Fiatstan uses 18,000 hours of labor per week to produce corn and 54,000 hours per week to produce jeans. 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 corn and jeans it produces. Charisma's opportunity cost of producing 1 bushel of corn is of jeans, and Fiatstan's…Which of the following is proof that international trade is beneficial? O the fact that different regions in the United States specialize in different products O the international trade in exotic products O the sheer volume of trade between very different nationsswer text provided. O the concept of absolute advantageThe following graph is the respective production possibility curves for the USA and South Korea. It shows there total output of medical devices and cars in a state of autarky (no trade), and it illustrates the gains that both countries can benefit from when they engage in trade. 10,000 10,000 8,000 tc 8,000 6,000 6,000 Consumpfion wth trode Consumplion wih trode 4,000 4,000 2,000 2,000 D. 1,000 0.5 1 3 2. 3 Automobiles (millions) Automobiles (millions) (a) USA (b) South Korea Medical Devices Automobiles (millions) USA 4,000 0.5 million South Korea 1,000 2 million Answer the following questions utilizing the textbook and your lecture videos: 1) What assumption in the production possibilities model may lead the model to overstate the gains from trade and cause the actual gains to be less than predicted by the model? 2) Who gains from trade in this scenario? Who may be hurt by trade in this scenario? 3) Do you think there is a role for the government to help those who are hurt by trade in…
- Austria and Gemany only produce two goods: beer and sausages. The muaber of workers is 10 in Austria and 30 in Germany and the production possibilities frontiers for both countries are given below. Austria Gemany 600 150 Liters of beer Liters of bee 900 a) What is the ourtput of beer per unit of labor in Austria? b) / What is the output of sausages per unit of labor in Germany? I Which country has a "comparative advantage" in which product? Caleulate and explain briefly. d) production? Explain briefly. 3) Which courtry has an absolute advantage in beer production and which country in sausage sasnes jo s 东 nrs joThe following production possibilities schedule shows the quantities of tuckheat and comtt can be produced in the United States and Canada with one unit of equivlert resources Buckwheat Corn (bushels) (bushels) United States 64 14 Canada 24 6. For both countries to be able to gain from trade Canada would not gain by producing and exporting corn and importing buckwheat unless it received O A. any quantity of buckwheat. O B. more than 4.57 bushels of buckwheat per bushel of corn. O C. more than 4 bushels of buckwheat per bushel of corn. O D. more than 6 bushels of corn.The following production possibilities schedule shows the quantities of soybeans and oil that can be produced in Canada and Mexico with one unit of equivalent resources Of (barrels) 12 6 Canada Mexico Mexico would not gain by producing and exporting oil and importing soybeans unless it received O A more than 4 17 bushels of soybeans per barrel of of OB. 2 bushels of soybeans per barrel of o OC any quantity of soybeans OD. more than 5 42 bushels of soybeans per barrel of ol OE more than 0.5 barrel of ol Soybeans (bushels) 65 25