If money is a neutral medium of exchange, as Adam Smith defined it, why does money today divide nations? Draw 2 analogies explaining this situation, by using Adam Smith’s arguments?
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If money is a neutral medium of exchange, as Adam Smith defined it, why does money today divide nations? Draw 2 analogies explaining this situation, by using Adam Smith’s arguments?
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- Suppose we consider the outcome in an exchange economy to be unfair, consumers of type A get a lot more X and Y than consumers of type B because of initial endowments. According to equilibrium-in-exchange theory, what should society do?A widget has an opportunity cost of 4 wadgets in Saudi Arabia and 2 wadgets in the United States. Given these opportunity costs, you would suggest that: Group of answer choices Saudi Arabia specialize in wadgets and the United States in widgets. Saudi Arabia specialize in widgets and the United States in wadgets. Both countries should produce an equal amount of each. No trade should take place.Deltra was willing to purchase a dozen cookies for $40 that Deirdre was willing to sell for anything more than $22. If they agreed on a price of $26, how much total value was created in this exchange?
- There are two countries: Country A and Country B. These countries have the same amount of resources and both produce the same two goods, pencils and markers. The opportunity cost of pencils in Country A is ½ markers per pencil and the opportunity cost of pencils in Country B is 4 markers per pencil. Would both of these countries accept a trade of 5 markers per pencil? Group of answer choices No. Country A will reject this trade No. Country B will reject this trade Yes. Both countries will accept this trade. No. Both of these countries will reject this trade.Steve and Craig have been shipwrecked on a deserted island in the South Pacific. Their economic activity consists of either gathering pineapples or fishing. We know Steve can catch four fish in one hour or harvest two baskets of pineapples. In the same time Craig can reel in two fish or harvest two baskets of pineapples. If Steve and Craig don't trade with each other, who is better off? Why?Two countries, Cordy and Ceps, can produce two goods (good 1 and good 2). There are two factors of production, labor (measured as hours worked per period of time) and capital (machine hours per time period). The production of good 2 uses labor relatively intensively; product 1 requires relatively more capital. Consider the following figure, which illustrates two different production possibilities (I and II). 1. Good2 II. II. Good1 A) Enter an own value for each country's existing quantity of labor and an own value for each country's quantity of capital so that of each country's amount of capital so that II is Cordy's production possibility frontier. Justify your choice of figures well.
- Jason and Holly produce lollipops and chocolates. Their production possibilities are given by the following functions: Jason: Q = 140 - 10QC %3D Holly: Q = 110 - 5Qc !! Before they trade, Jason is producing and consuming 60 lollipops and 8 chocolates. Before they trade, Holly is producing and consuming 55 lollipops and 11 chocolates. Then they decide to specialize and trade based on comparative advantage. They agree to trade 66 lollipops for 9 chocolates. How many MORE lollipops will Jason have with trade compared to without trade? Answer:TRUE OR FALSE One implication of Walras’ Law for a two-commodity exchange economy is that if one market is in equilibrium then the other market must also be in equilibrium.Parts C and D please Assume that the world consists of two countries, the US and India. Technologies are as follows: Hours required for production textiles India: 8 Hours required for production textiles US: 6 Hours of production for airplane India: 24 Hours of production for airplane US: 8 India is endowed with 96 hours of L. Let textiles be the numeraire: Pt =1, so Pa=relative price of airplanes=$ price of airplanes.a. What is the range of possible values for the eqm (rel.) price of airplanes under free trade, FT?b. Suppose the FT price of airplanes is 2. What is the equation that describes the set of possible Cbundles forIndia under FT? Under autarky?c. Suppose that eqm C in India under FT is 8 tons of textiles and 2 airplanes. Check that this is possible under FTbut not possible under autarky using the equations from part b. Does India gain from trade? How do you know?d. The “L theory of value” as discussed by Karl Marx in Das Kapital says that goods have intrinsic value equal…
- Consider a 2x2x2 Heckscher-Ohlin model with two countries, Australia and Japan. Australia produces two goods, wine and software. Production of wine is relatively labor intensive, and Australia is relatively capital abundant. a. Using the production possibility frontier diagram, show how Australia can be better off once it engages in trade. Explain your answer. b. Derive the Stopler-Samuelson and Rybczynski theorems, using fully labelled graphs to support your answers. c. Suppose Australia imposes a tariff on importing goods, which raises the relative price of the import-competing sector's output. How does the Stolper-Samuelson theorem predict about changes in factor prices in Australia? Why? Explain your answer. c. Suppose the amount of capital stock increased in Australia. What is the prediction of the Rybczynski theorem on changes in the production amounts of wine and software in Australia (use the production possibility frontier diagram to illustrate your answer, fully label…Two countries, Cordy and Ceps, can produce two goods (good 1 and good 2). There are two factors of production, labor (measured as hours worked per period of time) and capital (machine hours per time period). The production of good 2 uses labor relatively intensively; product 1 requires relatively more capital. Consider the following figure, which illustrates two different production possibilities (I and II). 1. Good2 II. 11. Good1 A) Enter an own value for each country's existing quantity of labor and an own value for each country's quantity of capital so that of each country's amount of capital so that II is Cordy's production possibility frontier. Justify your choice of figures well.In the online lectures, Professor Torres mentioned one other great contribution that came from Adam Smith and his book. After he reviewed the misery, poverty, useless wars, political corruption, and the dismal lack of progress in 2000 years of human history, what else did Adam Smith conclude?. Multiple Choice If nations would stop warring with each other and started to trade with each other, then the entire world would be much better off and living standards would rise. If nations would establish a one world government (much like the so-called globalists like George Soros are trying to do in today's world). then we would have peace and prosperity That blocking trade and ralsing taxes on imports was the best thing any nation could do. He concluded "Don't worry - Be Happy