EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 10.5, Problem 2TTA
To determine
To discuss: factors that lead to
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home cheese alc=1hr/kg wine alw=2hrs/gallon
foreign cheese alc*=6hrs/kg wine alw*=3hrs/gallon
Calculate the Home country's opportunity cost of producing cheese.
In which product does the Home (Foreign* ) country has an absolute advantage?
Show in which product does the Home (Foreign* ) country has comparative advantage?
Calculate the relative supply (RS)
With trade, what is the equilibrium range that the relative price of cheese to wine will settle?
Supposing that the intersection of RS and RD occurs at PC /PW = 1, what is the implication?
Y
100
Country A
X
Y
40
Country B
40
X
20
a) How much of Good Y will Country B produce if they specialize in their comparative advantage? 40
b) By themselves, if Country B produces 18 units of Y, what is the maximum amount they could produce of Good X? 18
c) If the terms of trade proposed are 5 X for 10Y, how much will Country B be able to consume of Good Y after trade if they specialize in
their comparative advantage before trading? 40
According to the concept of comparative advantage, a good should be produced in that nation where:
its domestic opportunity cost is greatest.
money is used as a medium of exchange.
its domestic opportunity cost is least.
the terms of trade are maximized
Chapter 10 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 10.2 - Prob. 1MQCh. 10.4 - Prob. 1MQCh. 10.4 - Prob. 2MQCh. 10.4 - Prob. 1.1MQCh. 10.5 - Prob. 1TTACh. 10.5 - Prob. 2TTACh. 10.7 - Prob. 1MQCh. 10.7 - Prob. 2MQCh. 10.7 - Prob. 3MQCh. 10.8 - Prob. 1TTA
Ch. 10.8 - Prob. 2TTACh. 10.8 - Prob. 1MQCh. 10.8 - Prob. 2MQCh. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQCh. 10 - Prob. 10.1PCh. 10 - Prob. 10.2PCh. 10 - Prob. 10.3PCh. 10 - Prob. 10.4PCh. 10 - Prob. 10.5PCh. 10 - Prob. 10.6PCh. 10 - Prob. 10.7PCh. 10 - Prob. 10.8PCh. 10 - Prob. 10.9PCh. 10 - Prob. 10.10P
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- 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. a) What is the free trade price of good Y? Show your work. b) How many units of good Y are traded under free trade? Show your work. c) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the price of good Y that Foreign exporters receive? Show your work. d) 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. e) 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. f) If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariff revenue? Show your work. g) Assume…arrow_forwardAccording to the concept of comparative advantage, a good should be produced in that nation where: its domestic opportunity cost is least. money is used as a medium of exchange. its domestic opportunity cost is greatest. the terms of trade are maximized.arrow_forwardConsider a region with two export products (gloves and socks) and two local goods (tattoos and manicures). The production of each export good is subject to localization economies, so each city specializes in one export good. According to Mr. Wizard, “If my two assumptions (one for export products and one for local goods) are correct, all the cities in the region will be the same size.” Assume that Mr. Wizard’s logic is correct. List his assumptions and explain why together they imply the region’s cities will be the same size.arrow_forward
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