Answer the following with complete solution What is the production level of X and Y in nation A and nation B if they decide to trade? What is the level of consumption of nations A and B after trade?Show whether each nation will improve its welfare if it trades with another nation. Show full solution Nation ANation BY = 225U₁ = (XY)UAY = 121-UB40186Ug = (XY) = Assume that international price is P₂ = 1.5 which means that for each X, 1.5 units of Y must beXpaid [e.g., Y = 1.5X]. Assume also that whoever has comparative advantage in X exports 52.33units of X and whoever has comparative advantage in Y exports 78.5Y.

1. Production Levels After Trade:Nation A specializes in producing commodity Y.Nation B specializes…

Nation A Nation B Y = 225 U₁ = (XY) UA Y = 121 - UB 40 186 Ug = (XY) = Assume that international price is P₂ = 1.5 which means that for each X, 1.5 units of Y must be X paid [e.g., Y = 1.5X]. Assume also that whoever has comparative advantage in X exports 52.33 units of X and whoever has comparative advantage in Y exports 78.5Y.

Nation A Nation B Y = 225 U₁ = (XY) UA Y = 121 - UB 40 186 Ug = (XY) = Assume that international price is P₂ = 1.5 which means that for each X, 1.5 units of Y must be X paid [e.g., Y = 1.5X]. Assume also that whoever has comparative advantage in X exports 52.33 units of X and whoever has comparative advantage in Y exports 78.5Y.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose the government of the U.S. wants to protect the domestic sugar industry by restricting sugar imports. Suppose the U.S. produces sugar domestically according to the supply curve QS = P, and suppose the domestic demand for sugar is QD = 8 – P. The world price of sugar is $2. For price of sugar, the units are $/lb., and for quantity of sugar, the units are 1,000,000 Ibs./year.
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 = 2 cans tuna fish Tunata: 1 can baby formula = 4 cans tuna fish a. In what product should each nation specialize? Canswicki should produce (Click to select) ♥ and Tunata should produce | (Click to select) ♥ b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula = 2.5 cans tuna fish: (Click to select) ii. 1 can baby formula = 1 can tuna fish: (Click to select) v iii. 1 can baby formula = 5 cans tuna fish: | (Click to select) v
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 = 4 cans tuna fish Tunata: 1 can baby formula = 6 cans tuna fish a. In what product should each nation specialize? Canswicki should produce (Click to select) V, and Tunata should produce (Click to select) V b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula = 3 cans tuna fish: (Click to select) V ii. 1 can baby formula = 7 cans tuna fish: (Click to select) V iii. 1 can baby formula = 4.5 cans tuna fish: (Click to select) ♥
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 = 3 cans tuna fish Tunata: 1 can baby formula = 5 cans tuna fish a. In what product should each nation specialize? Canswicki should produce [(Click to select), and Tunata should produce [(Click to select) ♥ b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula = 2 cans tuna fish: (Click to select) ii. 1 can baby formula = 3.5 cans tuna fish: (Click to select) iii. 1 can baby formula = 6 cans tuna fish: (Click to select)
3. Be sure to label all points. Suppose the domestic autarky relative price M/S=1 and autarky consumption takes place at point A with (M/S) (75, 100). Production with free trade takes place at point B with (M, S) = (100, 70). Does the country specialize in the production of M or S? The country exports 15 units of M and 45 units of S are imported. Find the consumption bundle (M, S) and label it point C. Sketch the trade triangle. What are the terms of trade? Evaluate the gains from trade in terms of M for this economy. M 2
Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y from foreign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and the export supply curve for good Y in Foreign country is given by: EX = PY – 40. Free Trade Price: $70 30 Units of Good Y are traded under free trade If a tariff of $15 is imposed by the home country on each unit of good Y imported, foreign exporters receive a price of $85. a) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the price of good Y that Home consumers pay? Show your work. b) If home country imposes a specific tariff of $15 per unit of good Y imported, how many units of good Y are traded now? Show your work. c) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariff revenue? Show your work. d) Assume that instead of a specific tariff, an import quota will be used on good Y. What is the…
Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y from foreign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and the export supply curve for good Y in Foreign country is given by: EX = PY – 40. Free Trade Price: $70 30 Units of Good Y are traded under free trade If a tariff of $15 is imposed by the home country on each unit of good Y imported, Foreign exporters receive a price of $60. If a tariff of $15 is imposed by the home country on each unit of Good Y imported, Home consumers pay $75 If a tariff of $15 is imposed by the home country the number of goods traded is 20. a) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariff revenue? Show your work. b) Assume that instead of a specific tariff, an import quota will be used on good Y. What is the amount of the quota that will have identical effects (in terms of amount of good Y imports and the…
Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2 There is now also another country, Foreign, with a labor force of 800. Foreign’s unit labor requirement in apple production is 5, while in banana production it is 1. Now suppose world relative demand takes the following form: Demand for apples/demand for bananas = price of bananas/price of apples. Graph the relative demand curve along with the relative supply curve. What is the equilibrium relative price of apples? Describe the pattern of trade. Show that both Home and Foreign gain from trade.
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 no
given the following table for obtaining points on country A's offer curve: possible term of trade Qty of imports of good Y demand qty of exports of good X supplied 1X:1Y 40 units 40 units 1X:2Y 90 units r 1X:3Y 120 units s in this table, a. r = 45 units, s = 40 units b. r = 180 units, s = 40 units c. r = 45 units, s = 360 units d. r = 180 units, s = 360 units
True or False: If Country B has an absolute advantage over Country A in producing bicycles, it will also have a comparative advantage over Country A in producing bicycles
Germany can produce either 40 units of pretzels or 20 units of cars per labour hour. Canada can produce either 61 units of pretzels or 14 units of cars per labour hour. Suppose Canada follows its comparative advantage in deciding what to produce and trade with Germany at a trade price of 0.34 units of cars for one unit of pretzel. For every 5050 units of the goods that Canada produces and trades with Germany, what are the gains from trade in terms of the other goods?