MicroEconomics (about winners and losers from free trade) Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of a meeker is $33. Suppose that the world price for a meeker is $25. Assume that Meekertown is too small to influence the world price for meekers once they enter the international market. 1. If Meekertown allows free trade, it will be 1. Export 2. Import meeker. 1. Meekertownian consumers are worse off under free trade than they were before. 1. True 2. False 2. Meekertownian producers are better off under free trade than they were before. 1. True 2. False 3. True or False: When a country is too small to affect the world price, allowing for free trade will never increase total surplus in that country, regardless of whether it imports or exports as a result of international trade. 1. True

MicroEconomics (about winners and losers from free trade) Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of a meeker is $33. Suppose that the world price for a meeker is $25. Assume that Meekertown is too small to influence the world price for meekers once they enter the international market. 1. If Meekertown allows free trade, it will be 1. Export 2. Import meeker. 1. Meekertownian consumers are worse off under free trade than they were before. 1. True 2. False 2. Meekertownian producers are better off under free trade than they were before. 1. True 2. False 3. True or False: When a country is too small to affect the world price, allowing for free trade will never increase total surplus in that country, regardless of whether it imports or exports as a result of international trade. 1. True

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 2: Comparative Advantage and Gains from Trade Suppose that Dennis and Janice are roommates. If Dennis puts all his effort into doing laundry, he can wash 20 loads per week. if he puts all his effort into cooking meals, he can produce 30 meals. If Janice puts all her effort into doing laundry, she can wash 20 loads per week. If she puts all her effort into cooking meals, she can produce 20 meals. a) Draw the Production Possibilities Frontier for Dennis and for Janice. Before trade, who (if anyone) has the absolute advantage in the production of laundry and meals? b) Fill in the following chart. Based on your calculations, who has the comparative advantage in laundry and who has the comparative advantage in meals. Laundry Meals Opportunity Opportunity Cost of Cost of Laundry Meals Dennis 20 Janice 20 30 20 c) Assuming that before specialization and trade both Dennis and Janice spend half of their time on each task, what is the total laundry and meal production for the household.…
Consider the following model of trade between Home and Foreign. Assume throughout that those two countries are the only two countries in the world, at least for purposes of trade. There are two goods: Corn and Radio. Consumers always spend one-third of their income on Corn and the remainder on Radios. The only factor of production is labour. Each home country worker can produce 2 units of Corn or 3 units of Radios per unit of time, while each foreign worker can produce 2 units of Corn or 4 units of Radios per unit of time. There are 30 workers in Home and 60 workers in Foreign. Find the autarky relative price of Radios in both countries (i.e., the price of Radio divided by the price of Corn).
According to the resource-based view, there are economic gains from international trade because some firms in one nation generate exports that are valuable, unique, and hard to imitate that firms from other nations find it beneficial to import. O True O False
Highlight the basis for trade between two countries with identical production possibility frontiers and different demand conditions.
Consider two countries Home and Foreign producing goods using only one factor of production, Labor. These are the marginal products of labor. Home has 100 people and foreign has 50 people. Home: Wheat 4 bushels Cloths 2 yards Foreign: Wheat 1 bushel Cloths 1 yard Assuming there is no trade, draw production possibility frontiers of two countries. With no trade, what are the relative prices of wheat and cloths in two countries? What will happen when they begin to trade?
(h) Suppose you conduct an opinion poll among individuals at Home, in which you ask them whether they have benefitted from international trade. What do you predict the response would be? Is this consistent with the empirical evidence we observe about people’s support for free trade in reality?
4.
Consider the following model of trade between Home and Foreign. Assume throughout that those two countries are the only two countries in the world, at least for purposes of trade. There are two goods: Corn and Radio. Consumers always spend one-third of their income on Corn and the remainder on Radios. The only factor of production is labour. Each home country worker can produce 2 units of Corn or 3 units of Radios per unit of time, while each foreign worker can produce 2 units of Corn or 4 units of Radios per unit of time. There are 30 workers in Home and 60 workers in Foreign. Which country has an absolute advantage in Radios? In Corn?
Consider the following model of trade between Home and Foreign. Assume throughout that those two countries are the only two countries in the world, at least for purposes of trade. There are two goods: Corn and Radio. Consumers always spend one-third of their income on Corn and the remainder on Radios. The only factor of production is labour. Each home country worker can produce 2 units of Corn or 3 units of Radios per unit of time, while each foreign worker can produce 2 units of Corn or 4 units of Radios per unit of time. There are 30 workers in Home and 60 workers in Foreign. What is the optimal consumption and production for each country under autarky?