ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Suppose Country A can produce 200 tons of capital-intensive goods or 200 tons of labor-intensive goods in one day. Suppose Country B can produce 80 tons of capital-intensive goods or 160 tons of labor-intensive goods in one day. What is one possible price of capital-intensive goods (in terms of labor-intensive goods) that would make BOTH countries better off as the result of trade?arrow_forwardQuestions D,E,F.arrow_forwardSuppose the United States can produce cars at an opportunity cost of two computers for each car it produces. Suppose Mexico can produce cars at an opportunity cost of eight computers for each car it produces. Discuss how both countries can gain from free trade.arrow_forward
- Tariffs and import quotas promote economic inefficiency and reduce the real income of a nation. Economic analysis suggests that nations can gain by eliminating trade restrictions. Which of following best explains why, despite the resulting inefficiencies, trade restrictions exist in the real world? Trade restrictions are favored by many special-interest groups. Trade restrictions do not exist in most real-world scenarios. Trade restrictions promote economic prosperity in the long run. Trade restrictions are favored by most citizens and opposed by most special-interest groups. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardQuestions 12-15 refer to the simple (free) trade model graph of country A on the right that shows what happens to welfare of consumers, producers, and total, when country A opens its border to trade. The domestic price and world price are Pp and Pw, respectively. The equilibrium quantity under autarky (no trade) is Qp. After trade, domestic producers supply Qa and (Qw Qa) is imported from the rest of the world. Domestic Supply (S) Price (in US $) ↑ G PD H Pw Export Supply K Domestic Demand (D) 12. What is the gain in consumers' surplus (CS) after free trade? [Select one] а. Н Qa QD Qw Quantity b. I+J с. Н+1+] d. H +I+J+ K 13. What is the gain in total welfare (CS+PS) after free trade? [Select one] а. Н b. I+J с. Н +1+] d. H +1+J+ K 14. Fill in the blanks: "Due to free trade, gain welfare and lose welfare, respectively. a. consumers, producers b. producers, government c. consumers, government d. government, producers 15. What is the minimum "area" of surplus that needs to be transferred…arrow_forwardUse the following information to answer question: Assume the standard trade model with two countries (Alpha and Beta), two goods (food and drink), and two factors of production (land and labor). Further assume that Alpha is relatively labor-abundant; food is relatively labor intensive; drink is relatively land intensive. The pre-trade price of food in Alpha is while the pre-trade price of food in Beta is than the price of drink in Alpha than the price of drink in Beta. Greater; greater Less; less Less; greater Greater; Lessarrow_forward
- Suppose that a worker in Country A can produce either 6 units of corn or 2 units of wheat per year, and a worker in Country B can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Country A produces and consumes 30 units of corn and 10 units of wheat per year. Country B produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Country A sends 30 units of corn to Country B in exchange for 30 units of wheat. Country A will now be able to consume a maximum of Select one: a.30 units of corn and 30 units of wheat. b.40 units of corn and 20 units of wheat. c.40 units of corn and 30 units of wheat. d.10 units of corn and 40 units of wheat.arrow_forwardChoose four countries. One country in North America, another country in Central America, another country in the Caribbean and another country in South America and indicate, using the gravity model, which factors should increase or reduce trade between those countries. After that, choose a country in Europe and indicate, using the Gravity Model, how the intensity of trade changes with five countries. You must take into account the concept of the gravity model and the factors that affect trade such as language, culture, trade agreements, among others. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardConsider two countries, Home and Foreign. In the figure below, the import demand ("IDHome") curve depicts Home's demand for Foreign's flash drives, and the import supply curve ("ISForeign") depicts Foreign's supply of flash drives to Home. Assume Home is a "large" country that levies a tariff against Foreign imports of flash drives, thereby shifting the relevant supply curve from ISForeign to ISForeign +t. For the following questions, please refer to the figure below. P $30 28 26 24 22 20 18 16 15-- 14 12 10 8 6 4 2 0 2 4 ISForeign +t 6 8 10 12 14 16 18 20 22 22 24 26 28 ISForeign IDHome 30 Q With free trade, Home's consumer surplus equals $112.50 and Foreign's producer surplus equals $112.50. With a tariff of $ 12 per flash drive, Home's consumer surplus equals $72, Foreign's producer surplus equals $ 36, Home's tariff revenue equals $72, and Home's deadweight loss equals $45. Of the Home's tariff revenue, $36 comes from Foreign's producers, and the rest comes from Home's consumers.…arrow_forward
- Suppose there are two states that do not trade: Iowa and Nebraska. Each state produces the same two goods: corn and wheat. For Iowa the opportunity cost of producing 1 bushel of wheat is 3 bushels of corn. For Nebraska the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat. At present, Iowa produces 20 million bushels of wheat and 120 million bushels of corn, while Nebraska produces 20 million bushels of corn and 120 million bushels of wheat. a. If each state specialized in their respective comparative advantage: Iowa would produce million bushels of corn and million bushels of wheat. Nebraska would produce million bushels of wheat and million bushels of corn. Now assume Nebraska trades 120 million bushels of wheat for 120 million bushels of corn. With specialization and this trade, Nebraska will end up with million bushels of corn and million bushels of wheat, while Iowa will end up with million bushels of corn and million bushels of wheat. b.…arrow_forwardFinally, Canada and Australia are both English-speaking countries with not-too dissimilar population sizes. However, Canada’s trade is twice as large as that of Australia’s. to what extent, does comparative advantage help explain this?arrow_forwardAccording to the "Principle of Comparative Advantage," a country should specialize in producing a good or service if it has:a) The highest opportunity cost b) The lowest opportunity cost c) The highest production cost d) The lowest production costarrow_forward
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