2. Find a Walrasian equilibrium in the following pure exchange economies: (a) (9ʻ9) = !m 'tr8o + fr 801 = (!x) In 1 u2(x2) =log x+ log x3, w2 = (3,6) %3D (b) u1(x1) = log x +log xỉ, wi = (7,1) uz(x2) = min{x3, x3}, wz= (1,7) (Hint: You can let the price p2 of good 2 be p2 = 1 without loss of generality.)
Q: Consider a two-country, two-commodity model. The table below shows the units of Good X and Good Y…
A: The advantage is the condition that benefits or add a favorable position in the situation.
Q: Consider two countries, China and South Africa, both producing textiles and beer. The table below…
A: From the given table we can observe that if all resources are fully employed then China can produce…
Q: TRUE OR FALSE One implication of Walras’ Law for a two-commodity exchange economy is that if one…
A: Walras law says that if the demand and supply is satisfied for one good in any economy with two…
Q: The country of "Econoland" can use its resources to produce either 500 tons of crab or 200 tons of…
A: Here, Two countries are given as Econoland and Arcadonia, which are producing two goods as crab and…
Q: According to the Heckscher-Ohlin model, Brazil will have a comparative advantage in oranges if the…
A: The Hakcher-Oli Allen model is an economic introduction that they can produce the country that can…
Q: Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in…
A: A nation is said to have comparative advantage in the production of a good or service if it can…
Q: Zeetopia and Freshland are two small tropical islands that use the same amounts of resources to…
A: Hello, thank you for the question. Since there are multiple subpart questions posted here, only the…
Q: "The Heckscher-Ohlin Model suggests that the basis of comparative advantage lies primarily in a…
A: The Heckscher-Ohlin Model is a general equilibrium mathematical model of international trade. The…
Q: According to the principle of comparative advantage, - countries should specialize in the…
A: According to the law of comparative advantage, In the 2x2 model, even if one nation is less…
Q: Consider the Specific Factors model with two countries, Home and Foreign, with two goods, cloth (c)…
A: PPF production possibility frontier the locus of points depicting the output mix which a country can…
Q: Assume that the global economy consists of only two countries called F and G. It is said that there…
A: Given: Case 1: (1) Country F: X 10 units or Y 20 units. (2) Country G: X 10 units or Y 10 units.…
Q: Q3. In the United States, one worker can produce 10 tons of steel per day or 20 tons of chemicals…
A: In the international market, a country can have an absolute advantage in the manufacturing of a…
Q: Suppose an economist develops an international trade model based on the assumption that there are…
A: The Economist mostly considered only two countries and two goods for the better understanding of the…
Q: In Country T, it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton of…
A: It might be argued that if countries used the concept of comparative advantage to choose what…
Q: Zeetopia and Freshland are two small tropical islands that use the same amounts of resources to…
A: Hello, thank you for the question. Since there are multiple sub-part questions asked here, only the…
Q: Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical…
A: The businesses, and producers are considered to be the suppliers who makes up the supply side of the…
Q: Hubert and Kate run a catering business in which they have two major tasks: getting new cllenits and…
A: The trade would involve exchange of various goods and services. The trade would result in the…
Q: Comparative advantage is the... a. Gains from international trade. b. Ability of one region to…
A: Comparative advantage is the basis of goods and services traded in the international market.
Q: Q58 Suppose Spain is currently producing 90 units of wine and 10 units of cheese, but to produce 10…
A: Answer: To produce 10 more units of cheese Spain sacrifices 30 units of wine. So the opportunity…
Q: Consider a 2x2x2 Heckscher-Ohlin model with two countries, Australia and Japan. Australia produces…
A: The Stolper-Samuelson Theorem predicts that in India, as trade barriers continue to decline, the…
Q: Suppose the Heckscher-Ohlin model was modified to allow for technology differences to exist between…
A: The Heckscher-Ohlin model is an economic theory that proposes that countries export what they can…
Q: Let us consider the following version of the Heckscher-Ohlin model with two countries H and F, two…
A: Given Information: The relative price of good x increases. Production of good X is skilled labour…
Q: If Big Macs were a durable good that could be costlessly transported between countries, which of the…
A: An arbitrage opportunity, in economics, the existence of one good being traded at two different…
Q: Suppose we have the following information about the productivity of industry in Japan and Korea. The…
A: From the question, we know that Japanese workers can produce 6 units of steel or 3 TVs in an hour.…
Q: Consider the Hecksher-Ohlin model. Let the total endowment of capital in Home and Foreign be 30 and…
A: Here, according to the given information, it can be said that Home has higher capital and labor than…
Q: Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in…
A:
Q: Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in…
A: Comparative cost expressed in the context of opportunity cost.
Q: A worker in the United States and a worker in China can each produce 1,000 pairs of jeans per week.…
A: Specialization in trade is based on comparative advantage in production. In international trade…
Q: Consider two countries (Russia and India) that can produce two goods (Books and Automobiles) using…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: a) sen What is: (not more than 3 sentences for each of them) Absolute advantage? Comparative…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Discuss the theory of comparative advantage , highlighting the extent to which the Asian Tigers have…
A: The theory of comparative advantage by David Ricardo tells us that it is possible for a country to…
Q: Suppose that Brazil is capital abundant and Chile is natural resource abundant. If timber is natural…
A: Brazil is capital abundant Chile is natural resource-abundant Timber is natural resource-intensive…
Q: The theory of comparative advantage: O a. Claims that economic well-being is enhanced if each…
A: Economic comparative advantage is the ability of a country to manufacture a specific product or…
Q: International trade Consider an H-0 economy in which there are two countries (US and France), two…
A: The Hecksher-Ohlin (HO) model proposes that when engaging in trade, nations with capital abundance…
Q: Assume output was initially 100 wheat and 25 TV's in Country A and 40 wheat and 40 TV's in Country…
A: The production frontier of the two countries are given in the figure in which the graph is steeper…
Q: Using a production possibilities frontier determine how does a country's PPF change in response to…
A: Production possibility frontier represents the amount of production possible in an economy while all…
Q: Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person…
A: Absolute advantage indicates the ability of an economy to produce a good more efficiently with the…
Q: Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in…
A: Canswicki requires to renounce 5 cans of tuna fish for 1 container of baby formula, though tuna fish…
Q: The U.S. and Canada both produce aircraft engines and tons of chemicals, which are sold for the same…
A: Absolute advantage in teade theory means producing more quantity that the other entity with the same…
Q: Based on the study of Herrin and Pernia (1986), what are the top 2 reasons for choosing a business…
A: Trading globally brings various remarkable freedoms, from expanded income and capital freedoms, to…
Q: Explain, with a two-country, two-good model, why the Heckscher-Ohlin model predicts only partial…
A: Trade between 3 or additional countries and product is noted as partial specialization attributable…
Q: Q.1.1 Consider the information contained in the table below. The table shows output rates in France…
A: The Correct answer is 'A' i.e., Holland should specialise in wine production and should export wine…
Q: Q39 According to the Heckscher-Ohlin theory, national comparative advantages exist because of...…
A: Hecksher-Ohlin model is an economic theory especially in international trade that states that…
Q: 96 FL If Honduras and Guatemala each specialize in producing the good in which they have a…
A: PPF shows the different combinations of goods and services that can be produced with the given…
Step by step
Solved in 4 steps with 9 images
- Given: (1) two nations (1 and 2) which have the same technology but different factor endowments and tastes, (2) two commodities (X and Y) produced under increasing costs conditions, and (3) no transportation costs, tariffs, or other obstructions to trade. Prove geometrically that mutually advantageous trade between the two nations is possible. Note: Your answer should show the autarky (no-trade) and free-trade points of production and consumption for each nation, the gains from trade of each nation, and express the equilibrium condition that should prevail when trade stops expanding.)Consider an international trade model consisting of three countries X, Y, and Z. Suppose X uses domestically, sends of its production to Y, and sends of its production to Z. Suppose Y uses domestically, sends of its production to X, and sends of its production to Z. Suppose Z uses sends of its production to X and sends of its production to Y. Assume this is a closed Leontief model. of its production of its production of its domestic goods, If we know country Z produced 124 thousand units of goods, then country X produces country Y produces thousand units of goods. thousand units of goods andAnalyze the following (2x2) matrix. Identify the countries having certain advantages. Moreover, specify the benefits of trade for both countries. Matrix A Wheat (bushels/labor hour ) Cloth (yards/labor hour) United States 6 4 U.K. 1 3 (Numerical values reflect output per unit of input) Will trade occur? Identify the country having the absolute advantage in wheat and the one having the absolute advantage in cloth. Identify the production possibility frontiers for both countries. Show the gains of trade if we assume that the U.S. exchanges 6 units of wheat for 6 units of cloth.
- 96 FL If Honduras and Guatemala each specialize in producing the good in which they have a comparative advantage and then trade with one another original PPF. O both countries would end up on a point to the right of their O both countries would end up at a point to the left of their one country would remain on its original PPF, while the other country would end up on a point to the right of its O both countries would end up on a different point on their Unit 7- Chapter 1...xlsx Unit 7- Chapter 1..xlsx O Topic 2 (2).docx O Topic 2 (1).docx 11:09 PM 73°F SUI prt sc delete f12 pus backspace -> unu Bock enter pause T shift alt ctrlAssume two countries and their Production Possibilities Frontiers (PPFs) represented by In similar cases, which statement is correct: their trade exchanges must lie within their they will witness mutually beneficial trade whether the slopes are equal or not they will witness mutually beneficial trade provided the slopes they will not witness mutually beneficialWhen a country speciallizes in the production of a good, this means that it can produce this good at a lower opportunity cost than Its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other. The following graphs show the production possibilitles frontlers (PPFS) for Maldonia and Sylvanla. Both countries produce lemons and coffee, each Initlally (that is, before specialization and trade) producing 18 million pounds of lemons and 9 million pounds of coffee, as Indicated by grey points (star symbols) labeled point A. Maldonia Sylvania 48 48 42 42 36 36 PPF 30 30 24 24 18 PPF 18 12 12 6 12 18 24 30 36 42 48 12 18 24 30 36 42 48 LEMONS (Milions of pounds) LEMONS (Millions of pounds) Maldonia has a comparative advantage in the production of while Sylvania has a comparative advantage in the . If each fully specializes (that is, produces only the good for which each has a comparative production of advantage), the most the…
- Question 1: Assume there are two nations: Panama and Guatemala that produce two commodities: coconuts and passion fruits. The table below contains the amount of each commodity produced per hour of labour in the two nations in terms of Kg. Panama Guatemala Passion fruits 9 4 Соconuts 6. c) Suppose passion fruits and coconuts are exchanged internationally at a rate of 1.2 passion fruit per coconut. Which country will export coconuts and why? Assuming both countries have 180 hours of labour each, draw the PPFS of both countries to your answer and explain why both countries are better off after trade. illustrate d) Draw the world supply curve of coconuts.Al has a comparative advantage as its opportunity cost of paneling is lower at 0.67 per hour as compared to Ken. Ken has a comparative advantage as the opportunity cost of producing drywall is lower at 1 hour as compared to Al. Assuming there are 10 walls to panel (10 paneling jobs) and 8 dry walls to build (8 dry wall jobs) what is the monetary savings if Ken and Al specialize in their respective comparative advantages?Comparative advantage and 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 corn, jeans, or a combination of both. The following table shows the amount of corn or jeans that can be produced using 1 hour of labor. Corn Jeans Country (Bushels per hour of labor) (Pairs per hour of labor) Bellissima 8 16 Felicidad 5 20 Initially, suppose Bellissima uses 1 million hours of labor per month to produce corn and 3 million hours per month to produce jeans, while Felicidad uses 3 million hours of labor per month to produce corn and 1 million hours per month to produce jeans. Consequently, Bellissima produces 8 million bushels of corn and 48 million pairs of jeans, and Felicidad produces 15 million bushels of corn and 20 million pairs of jeans. Assume there are no other countries willing to trade goods, so in the absence of trade between…
- V4. Assume there are only two oil producing countries in the world, C1 and C2. Each can export either 2 million or 4 million barrels of oil. If a total of 4 million barrels of oil are exported (both countries combined) then each barrel sells at $25. If there are 6 million barrels exported between them, each barrel sells at $15 and if there are 8 million barrels exported between them, then each barrel sells at $10. a) Write the “pay-off” matrix/table (i.e., the table or matrix indicating the strategies for each country, i.e., the amount of barrels they export and the revenue they make). b) Determine the Nash equilibrium for the game. c) Is there a strategy that results in larger revenue for both the countries? If so, which is that? d) For what wegitage for future payoff, δ, will both countries agree to use the strategy that benefits both of them, better?Consider an international trade model consisting of three countries X, Y, and Z. Suppose X uses domestically, sends of its production to Y, and sends of its production to Z. Suppose Y uses domestically, sends of its production to X, and sends of its production to Z. Suppose Z uses sends of its production to X and sends of its production to Y. Assume this is a closed Leontief model. If we know country Z produced 28 thousand units of goods, then country X produces country Y produces thousand units of goods. of its production of its production of its domestic goods, thousand units of goods andSuppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000. (g) If the terms of trade is 2 to 1 in favour of the country with the comparative advantage in food. Determine the combination of the two goods that each country will consume after trade if the country with the comparative advantage in fuel imports 4000 units of food. Label this point B and B* respectively. h) Who gains from trade? Who loses? What is the impact if any on the world? (i) What should the terms of trade be to make trade beneficial for BOTH Japan and Peru? Explain.