Suppose only two countries produce oil, Iran and Iraq. Both can produce either 2 or 4 million barrels a day (bbd). The decision is made simultaneously. This yields a total production of 4, 6 or 8 million bbd. At these production levels, world prices are $25, $15 and $10 per barrel. Assume production costs for Iran are $2/barrel and $4/barrel for Iraq. a. If Iran has a discount factor of .31, what is the minimum amount of time that Iraq has to threaten to punish them for high production to get them to cooperate on low production?
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- “The U.S. and Mexico can gain from trade with one another by taking advantage of the low cost of producing microchips in the U.S and the low cost of producing brooms in Mexico. The cost of producing one broom in U.S is 9 microchips. In Mexico the cost of producing a broom is only 1/9 microchips. If the U.S. produces microchips and imports brooms, and if Mexico produces brooms and imports microchips, both countries will gain from trade because they‟ll each produce the good they can produce more cheaply and import the good that the other country produces more cheaply. Note that the U.S. has an absolute advantage in the production of microchips while Mexico has an absolute advantage in the production of brooms.” In context of International Business and Trade the above example of US and Mexico focuses on absolute advantage. Explain the theory of absolute advantage and comparative advantage and also how nation states are competing to gain advantage over each other.For all questions, refer to the graph on the reverse side. Use this graph for 1 – 4. The graph represents the market for coffee. Estimation may be necessary, so show work. Assuming the market outcome, and a world price of $6.50 calculate the following: Price Qddom Qsdom Imports or exports Redo all parts of #1 assuming a world price of $3.50. Redo all parts of #1 assuming a world price of $3.50 and a tariff of $0.50. Redo all parts of #1 assuming a world price of $3.50 and a quota of 60. Name a good that will see increased sales due to the tariff or quota above. Name a good besides coffee that will see decreased sales due to the tariff or quota above. Suppose that 1 US$ = 1.5 South African Rand. Also, suppose that the representative good, peanut butter, is $3 per jar in the US and 4 Rand per jar in SA. How will this situation affect the exchange market for U.S. dollars? Explain/show the effect(s) of these prices. Include the initial effect(s), the market…Currently Turkey is importing oil. Note that some oil is already being produced in Turkey. Assume Turkey is willing to decrease its energy dependecy, and willing to reduce oil imports. Assume either, demand, supply or world price change in a way that would turn Turkey into an oil exporting country. Show on a graph with Turkish demand Turkish supply and world price, how the change, can reduce the oil imports to zero. What factor may be behind the change you have chosen?
- Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that, in the production of textiles, O Vietnam has a comparative advantage over other countries and Vietnam will export textiles. O other countries have a comparative advantage over Vietnam and Vietnam will export textiles. O other countries have a comparative advantage over Vietnam and Vietnam will import textiles. O Vietnam has a comparative advantage over other countries and Vietnam will import textiles. MacBook A esc D00 FA F1 F2 F3 FS % 4 Q W E R T tab I A S D F G s lockQuestion 19 Identify the following in the attached graph after the country opens to world trade and the world price is Pw2: Quantity produced domestically (numerical value) is [x3] Sdomestic A Po= 10 G MI N Pw28. K] Daomestie Q1=25 Q0 = 50 Q2=75 Question 20 Identify the following in the attached graph after the country opens to world trade and the world price is Pw2: Total cost of imports [x6]. Calculate the numerical value. Sdomestic A Po= 10 M! N Pw2=8 Deomestie Q1-25 Q0 = 50 Q2=75 Q10.05 X Answered - Incorrect • 1 attempt left What is a tariff? A tax imposed on exported products that lowers the domestic price below the world price. А A tax imposed on exported products that fixes the domestic price equal to the world price. В A tax imposed on imported products that lowers the domestic price below the world price. Your answer A tax imposed on imported products that raises the domestic price above the world price.
- Assume that the comparative-cost ratios of two products—baby formula and tuna fish—are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula ≡ 5 cans tuna fish Tunata: 1 can baby formula ≡ 7 cans tuna fish a. In what product should each nation specialize? Canswicki should produce _____- , and Tunata should produce _____ b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula ≡ 4 cans tuna fish: yes or no ii. 1 can baby formula ≡ 8 cans tuna fish: yes or no iii. 1 can baby formula ≡ 5.5 cans tuna fish: yes or noA country that produces paper is a price taker in the world paper market. The world price is pw: Suppose that the industry is not polluting. onor The domestic supply curve, S, is upward sloping, but the home country can nti import as much as it wants at the world price, pw. In the free-trade equilibrium, e1, the equilibrium quantity is Q, and the equilibrium price is the world price, pw- With a ban on imports, the equilibrium is e2, quantity falls to Q2, and price rises to P2 P2 How do we know that winners from trade can compensate losers and still have enough left over to benefit themselves? mes The winners from trade can compensate the losers and still have enough left over to benefit themselves because, with free trade, O A. consumer surplus increases by more than producer surplus decreases. Q2 Q1 Q, Tons per year O B. consumer surplus increases by more than deadweight loss increases. O C. producer surplus increases by more than consumer surplus decreases. O D. producer surplus…How did the laws or policies relating to importation of oil/petroleum of countries affect the spending of the consumer?
- The figure illustrates the market for coffee in Guatemala. 23 28 28 882 88 150 140 130 120 110 100 90 80 70 60 40 30 20 10 B с D F Q Refer to Figure 9-1. With trade, Guatemala will H Domestic supply World price Domestic demand 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 QuantityThe table below shows the monetary value of the production of gems and steel respectively in the calendar year of 2019 for the nations of Turkey and Zimbabwe. Use It to answer questions regarding a possible trade scenario between the two nations. Gems in biltions of USD Steel in billions of USD Year - 2019 Zimbabwe 0.2 10 Turkey Using Ricardlan logic, can Zimbabwe and Turkey trade either gems or steel with each other, and mutually benefit? Yes, Zimbabwe should specialize in gems, and Turkey should produce more steel than gems, and then trade its extra steel to Zimbabwe. No, neither nation has a comparative advantage in either the production of steel or gems, so therefore neither can benefit from trade. O a O b Yes, Turkey should speclalize in gems, and Zimbabwe should produce more steel than gems, and then trade its extra steel to Zimbabwe. O cIf the United States is currently importing 14 million barrels per day at a world price of $4.00 per unit (the entire amount consumed), what is the effect on imports of a tax equal to $8.00 per unit? Quantity of Barrels Supplied (Millions) Quantity of Barrels Demanded (Millions) 0 2 4 6 8 10 12 The amount of imports after the $8.00 per-unit tax is responses as a whole number.) ges Price per Barrel Get more help. $4 8 Using the table above, after the imposition of the $8.00 per-unit tax, the new quantity supplied is 4 million barrels and the new quantity demanded is 12 million barrels. (Enter your responses as a whole number.) 12 16 20 24 28 14 13 12 11 10 9 8 million barrels per day. Before the tax, domestic producers supplied 0 barrels of crude oil. They now supply million barrels Clear all (Enter your more less Check answer (e)