Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 25, Problem 10DQ
To determine
Free movement and the international movement of labor.
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6. What is a "brain drain" as it relates to international migra-
tion? If emigrants are highly educated and received greatly
subsidized education in the home country, is there
any justi-
fication for that country to levy a "brain drain" tax on them?
Do you see any problems with this idea? LO23.3
A German truck company is considering relocating its production from Germany to either Romania or Poland. Assume that labor is the only factor of production
and that wages in Poland equal €20 per hour while wages in Romania are €10 per hour. Production costs would be lower in Romania as compared to Poland if
Your answer:
O Polish labor productivity in trucks equaled 20 units per hour and Romania's 10 units per hour.
O Polish labor productivity in trucks equaled 20 units per hour and Romania's 20 units per hour.
O Poland had absolute productivity advantage in the overall manufacturing industry over Romania.
O Polish labor productivity in trucks equaled 50 units per hour and Romania's 20 units per hour.
Ciear answer
QUESTION 22
P
COUNTRY 1
25
20
15
10
5
d1 Q
0
0 3 6 9 1215182124
s1
IP
INTERNATIONAL MARKET
25
20-
15
10-
LO
P
5
S2
P
0
0 3 6 9 1215182124Q
25
20-
S1 15
IP
10
D2 5
D1 0
COUNTRY 2
⠀⠀
22. What is the net welfare gain from trade to the economy of country 1? (hint: the formula for calculating the area of a triangle is 1/2 times the base times the height)
a) 3
b) 6
c) 9
d) 13.5
e) 18
s2
IP
d2
0 3 6 9 1215182124Q
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Similar questions
- Which of the following statements about foreign trade is correct? Choose an answer: O 1. A good is imported if the world market price for this good is higher than the domestic opportunity costs of producing this good. O 2. A good is exported if the world market price for this good is lower than the domestic opportunity costs of producing this good. 3. The levying of a domestic duty rate on an imported good increases the producer surplus and reduces the domestic consumer surplus. O 4. If a country has an absolute advantage in one good, it also has a comparative advantage in that good. O 5. A particularly productive country can have a comparative advantage in all goods.arrow_forwardAmerican apparel makers complain to Congress about competition from China. Congress decides to impose either a tariff or a quota on apparel imports from China. Which policy would Chinese apparel manufacturers prefer? LO26.4 a. Tariff. b. Quota.arrow_forwardSuppose country A and B have a labour force of 1 and produce hops and barley using only labour. Country A's unit labour cost are 0.5 for hops and 0.5 for barley, country B's 0.2 for hops and 0.4 for barley. Suppose that both are needed to brew beer in equal quantitiy, so that both national and international demand has the property that equal amounts of barley and hops are demanded. How much more beer (as a percentage) will be brewed under international trade than in autarky? Please enter the percentage rounded to a whole number (up or down is both acceptable) without the percentage sign.arrow_forward
- According to standard theory, which of the following statements about immigration is true? O Total value of world output increases, the average wage of the receiver country falls, and the average wage of the source country falls. O Total value of world output decreases, the average wage of the receiver country rises, and the average wage of the source country falls. Total value of world output increases, the average wage of the receiver country falls, and the average wage of the source country increases. O Total value of world output increases, the average wage of the receiver country increases, and the average wage of the source country increases.arrow_forwardQUESTION 8 25 20 15 10 LO 5 P COUNTRY 1 A+ 11 s1 |⠀⠀⠀ SP -IP d1Q 0 0 3 6 9 1215182124 INTERNATIONAL MARKET P 25 20 15 10 5 0 0 3 6 9 12 15182124 08. Under open trade, who will gain and who will lose in country 1? a) consumers gain and producers lose. b) producers gain and consumers lose. c) both producers and consumers lose. d) the poor lose and the rich gain. DE S2 ⠀⠀ FIP D2 25 20 S1 15 10 5 d2 0 0 3 6 9 1215182124 Q D1 Q P COUNTRY 2 s2 IParrow_forwardIn Country A, the production of 1 bicycle requires using resources that could otherwise be used to produce 11 lamps. In Country B, the production of 1 bicycle requires using resources that could otherwise be used to produce 15 lamps. Which country has a comparative advantage in making bicycles? LO26.2 a. Country A. b. Country Barrow_forward
- 25 20 15 10 LO 0 P a 0 O 3 (d) areas (b) + (c) + (d) + (e) (e) areas (a) + (b) + (c) + (d) e 6 b O S 9 12 15 18 25. If the free trade price is IP and this country imposes a trade tariff of $6, the loss to the economy as a result of this tariff is represented by O(a) area (a) in this graph (b) area (b) in this graph (c) areas (c) + (d) P* 21 IP D 24 Qarrow_forward3. The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade, the optimal product mix for China is alternative B and for the United States is alternative U. LO20.2 a. Are comparative-cost conditions such that the two countries should specialize? If so, what product should each produce? b. What is the total gain in apparel and chemical output that would result from such specialization? c. What are the limits of the terms of trade? Suppose that the actual terms of trade are 1 unit of apparel for 1 unit of chemicals and 4 units of apparel for 6 units of chemicals. What are the gains from specialization and trade for each nation? China Production Possibilities Product A B D E F 30 24 6 Apparel (in thousands) Chemicals (in tons) 18 12 6 12 18 24 30 U.S. Production Possibilities Product R U V K pparel (in thousands) nemicals (in tons) > 10 8 4 2 4 8 12 16 20 p. 579arrow_forward3. The following hypothetical production possibilities tables are for China and the United States. Assume that before specialization and trade, the optimal product mix for China is alternative B and for the United States is alternative U. LO20.2 a. Are comparative-cost conditions such that the two countries should specialize? If so, what product should each produce? b. What is the total gain in apparel and chemical output that would result from such specialization? c. What are the limits of the terms of trade? Suppose that the actual terms of trade are 1 unit of apparel for 1 unit of chemicals and 4 units of apparel for 6 units of chemicals. What are the gains from specialization and trade for each nation? China Production Possibilities Product A D F Apparel (in thousands) 30 24 18 12 Chemicals (in tons) 12 18 24 30 U.S. Production Possibilities Product R T. V Apparel (in thousands) hemicals (in tons) 10 8. 4 4 8. 12 16 20 p. 579arrow_forward
- 5. Suppose that the comparative-cost ratios of two products- baby formula and tuna fish-are as follows in the hypotheti- cal nations of Canswicki and Tunata: Canswicki: 1 can baby formula = 2 cans tuna fish 1 can baby formula = 4 cans tuna fish Tunata: In what product should each nation specialize? Explain why terms of trade of 1 can baby formula = would be acceptable to both nations. 25 cans tuna fisharrow_forwardGreece and Finland produce and consume two goods, timber (T) and dairy product (D). Labor is the sole factor of production in the two countries. Greece is endowed with Lº =30,000 labor hours (1. hrs) and Finland is endowed with L =15,000 labor hours (1. hrs). In Greece it takes one (1) 1. hr to produce a ton of good (T), and one fourth (1/4) of a 1. hr to produce a ton of good (D). In Finland, labor productivity in good (T) is twice as high as labor productivity in good (T) in Greece, and labor productivity in good (D) is twenty-five percent (25%) lower relative to labor productivity in good (D) in Greece. Consumer preferences in the two countries are rigid in the sense that whatever the relative prices of the two goods are, residents in Greece always consume three-fourths (3/4) of the country's production, and residents in Finland consume two-thirds (2/3) of its production. Questions I Suppose the two countries engage in international trade, and that the international relative price…arrow_forwardQUESTION 25 25 20 15 10 LO 5 P S IP 0 0 36 9 12 15 18 21 24 Q O e) $18 25. If the free trade price is IP and this country imposes an import quota of 6 units, what will be the resulting efficiency loss? O a) $3 O b) $9 O c) $13.5 d) $40.5arrow_forward
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