EBK INTERNATIONAL ECONOMICS
7th Edition
ISBN: 9780134523866
Author: Gerber
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 4, Problem 5SQ
a)
To determine
Identify the variable and specific factors.
b)
To determine
Explain the exports of each countries.
(c)
To determine
Explain the effect of trade in the returns of land, labor, and capital in Countries U and C.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
***
Which of the following statements about production and trade is FALSE?
1. If a country has an absolute advantage in producing a good, then it also has the comparative advantage in the production of that
good.
II. Rich countries will generally have the comparative advantage in the production of all goods.
III. If a country has the absolute advantage in the production of a good, then this country will be made better off by specializing in
the production of that good.
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
b
C
d
Specialization and Trade Q4
Homework Answered
***
I only.
I and II only.
I, II and III.
Ill only.
Answered-Incorrect 1 attempt left
Specialization and Trade Q9
Homework Unanswered
X
Your answer
Resubmit
If a country closes off to trade and notices that the number of firms in an industry doubles in size, what economic theory would help us explain this phenomenon?
A. Stolper-Samuelson.
B. Melitz.
C. Ricardian.
D. Cournot.
Explain your answer in up to 200 words and using a diagram
Consider two countries, the U.S. and Bangladesh, trading two goods, shoes and food. There
are two factors of production, labor and capital. Assume that the production of shoes is relatively more
capital intensive than the production of food in the U.S. Instead, the production of shoes is relatively more
labor intensive in Bangladesh than the production of food. Assume that the U.S. is the capital abundant
country and that Bangladesh is labor abundant. Both goods are produced by both countries in equilibrium.
Illustrate the initial factor prices and factor intensities in a carefully drawn and labeled diagram with capital
on the y-axis and labor on the x-axis, and indicate the cone(s) of diversification.
Assume that the world price of shoes declines, but that both countries' continue to produce both goods.
Illustrate the effect of this change in either the same or a new diagram. How do the real returns to both
factors change in the two countries? Explain whether your findings are…
Chapter 4 Solutions
EBK INTERNATIONAL ECONOMICS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Suppose that Brazil is capital abundant and Chile is natural resource abundant. If timber is natural resource-intensive and computers are capital intensive, then after trade begins between Brazil and Chile, which of the following statements is true? a) It is impossible to determine which owners will gain in each country. b) The incomes of the owners of natural resources are likely to fall in Chile. c) The incomes of the owners of capital are likely to fall in Brazil. d) The incomes of the owners of capital are likely to rise in Brazil.arrow_forwarda) Which country has an absolute advantage in bananas? In wheat? b) What is the relative price of bananas in Costa Rica if it does not trade? In Argentina? c) What is opportunity cost of wheat in Costa Rica? In Argentina? d) Which country has a comparative advantage in bananas? In wheat? Explain your answer. e) What are the upper and lower bounds for the trade price of wheat?arrow_forwardY 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? 40arrow_forward
- Country A can produce 20 units of wheat or 10 units of corn, while Country B can produce 15 units of wheat or 5 units of corn. Which country has the comparative advantage in producing wheat?arrow_forwardArgentina and Brazil are considering the potential gains of trade. There is only one factor of production: labor. There are only two goods being produced in either economy: coffee and wine. Argentina can employ 10,000 hours of labor per month. Producing 1 lb. of coffee requires 2 hours of labor, and producing 1 bottle of wine requires 4 hours of labor, in Argentina. Similarly, Brazil can employ 10,000 hours of labor per month. Producing 1 lb. of coffee requires 1 hour of labor, and producing 1 bottle of wine requires 5 hours of labor, in Brazil.arrow_forwardTwo countries, Nicaragua and Argentina can both produce bananas and wheat. Their production possibility frontiers are shown below. Based on this we can say that Nicaragua has a comparative advantage in producing__________. Both countries can gain from trade if Nicaragua produces___________ and Argentina produces __________ and trade. Bananas; bananas; wheat. Bananas; wheat; bananas. Wheat; wheat; bananas Wheat, bananas; bananasarrow_forward
- As a country develops economically, what changes usually take place in the goods it exports? Select your answer and explain WHY There is little change because comparative advantage does not change. Raw materials and agricultural products decline in importance, replaced by services and manufactured goods. Services and manufactured goods decline in importance, replaced by raw materials and agricultural products. Exports go from being diversified to being specialized in whatever the country finds its comparative advantage.arrow_forwardCountry A Country B 200 corn 600 150 375 100 50 50 75100 150 200 cars 25 50 75 100 cars a) What is the opportunity cost of making cars in each country? Make clear how you find this and what it means. b) If the countries were to specialize and trade, which country should specialize in making cars? Why? c) If the countries specialize completely according to comparative advantage (i.e.each produces only what they have the comparative advantage in) what would be the total production of cars and corn? How does this compare to the total production at their original pre-trade production points? d) Suppose the country that specializes in making only cars trades with the country that makes no cars. The car-maker sends the other country as many cars as they were consuming before trade. How much corn could the corn-making country trade for these cars and have both countries be better off than they were before trade?arrow_forwardSuppose a capital abundant country, such as Canada, enters into free trade with a natural resource rich country, such as India.I. Explain the form of trade, such as, who exports what and imports what, using the concept of comparative advantage in trade theory. Identify each country’s comparative advantage and disadvantage.II. Explain how trade creates winners and losers within each country?Note: You may/may not draw relevant diagrams to answer the above questions.arrow_forward
- c) Will both nations gain if 1 autos can be exchanged for 20 computers? d) Will both nations gain if 10 autos can be exchanged for 1 computers? e) Will both nations gain if 10 autos can be exchanged for 20 computers? f) What do your answers suggest about the effect of the terms of trade on the gains from trade for each nation and what a mutually beneficial terms of trade might be?arrow_forwardInternational Trade Suppose the production of chocolate and wine per hour of labor in Italy and France is as follows: Chocolate (C) Wine (W) Italy (I) 8 bars 4 bottles France (F) 6 bars 2 bottles a) Which country has the absolute advantage in chocolate production? Does the same country also have the comparative advantage in chocolate production? Explain your answers. b) Suppose that with free trade the price of one bottle of wine is 2.5 bars of chocolate. Further suppose that 100 million hours of labor are available in both countries. Carefully draw the production possibility curves in each country both with and without free trade. With reference to the graphs, briefly explain in words how free trade can help both countries become better off.arrow_forwardSuppose that Country A can produce 6060 bags of sugar or 3030 bags of flour per worker hour. Country B can produce 4040 bags of sugar or 1010 bags of flour per worker hour. Assume that there is 100%100% specialization, and each country has 55 worker hours.If each country specializes in its comparative advantage, calculate the quantity of the good that Country B should produce.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc