Suppose that Maldonia and Lamponia agree to trade. Each country focuses its resources on producing only the good in which it has a comparativeadvantage. The countries decide to exchange 16 million pounds of lemons for 16 million pounds of sugar. This ratio of goods is known as the terms oftrade between Maldonia and Lamponia.The following graph shows the same PPF for Maldonia as before, as well as its initial consumption at point A. Place a black point (+ symbol) on thegraph to indicate Maldonia's consumption after trade.Note: Dashed drop lines will automatically extend to both axes.Maldonia6456Consumption After Trade48PPF4032241616243240485664LEMONS (Millions of pounds)The following graph shows the same PPF for Lamponia as before, as well as its initial consumption at point A.SUGAR (Millions of pounds)

Trade is an activity where the exchange of goods and services takes place between the seller and the…

Answered: Suppose that Maldonia and Lamponia…

Microeconomics A Contemporary Intro

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ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter19: International Trade

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SUGAR (Millions of pounds) SUGAR (Millions of pounds) 4. Specialization and trade When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFS) for Maldonia and Lamponia. Both countries produce grain and sugar, each initially (1.e., before specialization and trade) producing 24 million pounds of grain and 12 million pounds of sugar, as indicated by the grey stars marked with the letter A. Maldonia Lamponia 64 64 56 56 48 PPF 48 40 40 32 32 24 PPF 24 16 16 8 48 56 64 16 24 32 40 48 56 64 16 24 32 40 GRAIN (Millions of pounds) GRAIN (Millions of pounds)
When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Glacier and Denali. Both countries produce corn and pistachios, each initially (i.e., before specialization and trade) producing 18 million pounds of corn and 9 million pounds of pistachios, as indicated by the grey stars marked with the letter A. PISTACHIOS (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF 6 Glacier A 12 18 24 30 36 CORN (Millions of pounds) 42 48 ? PISTACHIOS (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF + 6 Denali 12 18 24 30 36 CORN (Millions of pounds) 42 48
Country X has 100 units of labour and country Y has 200 units of labour. Both countries produce computers and televisions. The unit labour requirements are given in the table below: Computers Televisions Country X 50 Country Y 100 Assume that free trade exists and that the relative price is such that both countries specialize completely in the industry in which they have a comparative advantage (neither country produces both goods). The supply of computers relative to televisions will be Select one: a. 0.02 (or 1/50) O b. 0.013 (or 1/75) c. 0.01 (or 1/100) d. impossible to determine without knowing the relative price of computers in terms of televisions
Suppose that Maldonia and Desonia agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. Maldonia has a comparative advantage in the production of grain. The countries decide to exchange 4 million pounds of grain for 4 million pounds of tea. This ratio of goods is known as the terms of trade between Maldonia and Desonia. The following graph shows the PPF for Maldonia, as well as its initial consumption at point A. Place a black point (cross symbol) on the graph to indicate Maldonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. TEA (Mions of pounds) A 2 a 0 PPF 2 4 Maldonia 6 B 10 GRAIN (Millions of pounds) After trade, Maldonia consumes 12 14 10 million pounds of grain as well as Consumption After Trade million pounds of tea.
In an international market, we say that a country will be an (Blank) of a good if it has the (Blank) advantage in producing that good Answer options exporter and comparative exporter and absolute importer and comparative importer and absolute
Suppose Zambia is open to free trade in the world market for oranges. Because of Zambia's small size, the demand for and supply of oranges in Zambia do not affect the world price. The following graph shows the domestic oranges market in Zambia. The world price of oranges is Pw=$80 ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is a free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). PRICE (Dollars per ton) 1280 Domestic Demand Domestic Supply 1220 1160 1100 1040 980 920 860 800 740 P 680 + 0 3 6 9 12 15 18 21 24 27 30 QUANTITY (Thousands of tons of oranges) CS PS If Zambia allows international trade in the market for oranges, it will import tons of oranges. Now suppose the Zambian government decides to impose a tariff of $120 on each imported ton of oranges. After the tariff, the price Zambian consumers pay for a ton of…
Suppose that a tailor in Cottonland can sew either 40 cotton shirts or 10 silk shirts per week, and a tailor in Silkland can sew either 18 cotton shirts or 6 silk shirts per week. There are 20 tailors in Cottonland and 20 tailors is Silkland. Answer the following questions: 2.1. What country has the absolute advantage in sewing cotton shirts? What country has the absolute advantage in sewing silk shirts? 2.2. What country has the comparative advantage in sewing cotton shirts? What country has the comparative advantage in sewing silk shirts? Numerically 2.3. If the two countries specialize and produce according to the comparative advantage criterion, how much in terms of cotton and silk shirts each country will produce per week? Fill in the table below with your calculations. Cotton shirts/per week Silk shirts/per week Cottonland Silkland
Suppose Kenya is open to free trade in the world market for wheat. Because of Kenya's small size, the demand for and supply of wheat in Kenya do not affect the world price. The following graph shows the domestic wheat market in Kenya. The world price of wheat is Pw =$250 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). (? 490 Domestic Demand Domestic Supply 460 CS 430 400 370 PS 340 310 280 Pw 250 220 190 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of tons of wheat) If Kenya allows international trade in the market for wheat, it will import tons of wheat. Now suppose the Kenyan government decides to impose a tariff of $60 on each imported ton of wheat. After the tariff, the price Kenyan consumers pay for a ton of wheat is s and Kenya will import tons of…
Attempts 0.5 3. Tariffs Suppose Bangladesh is open to free trade in the world market for oranges. Because of Bangladesh's small size, the demand for and supply of oranges in Bangladesh do not affect the world price. The following graph shows the domestic oranges market in Bangladesh. The world price of oranges is Pw = $800 per ton. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). PRICE (Dollars per ton) 1280 1220 1160 1100 1040 980 920 860 800 740 680 0 Keep the Highest 0.5 / 2 Domestic Demand 2 wala Domestic Supply 4 6 8 10 12 14 16 QUANTITY (Thousands of tons of oranges) 18 20 Show the effects of the $60 tariff on the following graph. CS If Bangladesh allows international trade in the market for oranges, it will import PS Now suppose the Bangladeshi government…
Suppose that Yosemite and Congaree agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 6 million pounds of corn for 6 million pounds of lentils. This ratio of goods is known as the price of trade between Yosemite and Congre The following graph shows the same PPF for Yosemite as before, as well as its initial consumption at point A Place a black point (plus symbol) on the graph to indicate Yosemite's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. LENTILS (MEs of pounds) Youmite 12 Consumption Aer Trade (?)
Explain the difference between absolute advantage and comparative advantage. Which is the basis for international trade, and why? The graph below represents the market for sugar in the U.S. The domestic supply and demand curves are drawn, the world price for sugar is indicated, and the effect of a tariff the US is imposing on sugar imports is shown. Use the graphic to calculate consumer surplus, producer surplus, economics surplus, government revenue, and deadweight loss. Do so under each of the following three situations: 1) no trade, 2) free trade, and 3) the sugar tariff. A friend tells you the following: “Free trade sounds good, but a country like Honduras doesn’t have any comparative advantage compared to the United States. Therefore, trade with us will exploit them and make their economic situation worse.” Explain to your friend the error in his thinking.
The following graph shows a fictional world economy that consists of only two countries, Greenberg and Baxton. Both countries produce airplanes under increasing-cost conditions. Note that the left-hand part of the diagram is a mirror image of a standard supply-demand diagram, and therefore the supply and demand curves slope in directions opposite their usual directions. Greenberg Baxton 30 27 24 +18 + + 15 12 In the absence of trade (that is, autarky), the equilibrium price in Greenberg is $ and the equilibrium price in Baxton is |. (Hint: Enter all monetary values in full. For example, $7,000 rather than $7.) In the absence of trade, which of the following statements is correct? O Greenberg has the comparative advantage in production of airplanes. O Greenberg and Baxton are equally good at producing airplanes. O Baxton has the comparative advantage in production of airplanes. Now suppose both countries open up to international trade with each other. For each country, use the previous…

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