To find: the country which has
Explanation of Solution
The graph for Brazil's shoe market shows the lower price of shoes and high quantity as compared to the U.S. shoe market. Hence, Brazil has a comparative advantage in the manufacturing of shoes.
Brazil would export the shoes which would increase the shoe's supply in the U.S. market and consequently, the price of shoes in the U.S. market will decrease.
The production of shoes by the U.S. producers has a high
Trade:
Trade is an economic activity which includes the buying and selling of goods and services. Under the trade process, compensation is paid by buyer to the sellers in the form of currency.
Opportunity cost:
The opportunity cost is the cost of using the next best alternative. For example, harvesting with manual labor is replaced by harvesting with machinery. Hence, the opportunity cost of using machinery is the cost of manual labor forgone.
Want to see more full solutions like this?
Chapter 9 Solutions
Foundations of Economics (8th Edition)
- Ghana's parliament is debating how to undertake ISI. The debate centres on whether they should impose tariffs on imports or use quotas. Which system is better for consumers? (use a diagram to explain yourself).arrow_forwardYou are watching the nightly news. A political candidate being interviewed says, "I'm for free trade, but it must be fair trade. If our foreign competitors will not raise their environmental regulations, reduce subsidies to their export industries, and lower tariffs on their imports of our goods, we should retaliate with tariffs and import quotas on their goods to show them that we won't be played for fools!" If a foreign country subsidizes the production of a good exported to the United States, who bears the burden of their mistaken policy?arrow_forwardThe figure shows the markets for shoes if there is no trade between the United States and Brazil. Which country has a comparative advantage in producing shoes? With international trade, explain which country would export shoes and how the price of shoes in the importing country and the quantity produced by the importing country would change. Explain which country gains from this trade.arrow_forward
- Suppose that in a day a worker in the United States can produce 10 bushels of corn or 2 shirts. In Russia a worker can produce 9 bushels of corn or 3 shirts in one day. Which of the following would benefit both the United States and Russia if trade occurred? 1 shirt for 6 bushels of corn -----1 shirt for 4 bushels of corn 1 shirt for 1 bushel of corn 1 shirt for 2 bushels of corn Im doing review for a class and I realize that 1 shirt and for bushels are the correct answer I am just confused on what formula would apply to figue this outarrow_forwardIn January 2018, President Trump imposed tariffs on solar panels and washing machines of 30 to 50%. In March 2018 he imposed tariffs on steel (25%) and aluminum (10%) from most countries, representing an estimated 4.1 percent of U.S. imports. On June 1, 2018, this was extended to the European Union, Canada, and Mexico. The Trump administration also set and escalated tariffs on goods imported from China. As of January 2020, the Trump administration had imposed tariffs on 16.8% of all goods imported into the U.S. What would be the effects of these tariff on the US economy? Who would benefit and who would lose from these tariffs in the U.S.?arrow_forwardA semiconductor is a key component in your laptop, cell phone, and iPod. The table provides information about the market for semiconductors in the United States. Producers of semiconductors can get $18 a unit on the world market. a. With no international trade, what would be the price of a semiconductor and how many semiconductors a year would be bought and sold in the United States? b. Does the United States have a comparative advantage in producing semiconductors? c. Draw a graph to illustrate the U.S. supply and demand market for semiconductors. What is the price with free international trade? What is the quantity of semiconductors produced in U.S. and total quantity bought by U.S. people and the quantity exported from other countries? d.Due to loss of competitiveness brought on by appreciation of the exchange rate and the high production costs, U.S. government reduce the export (or limit the supply of domestic producers) by imposing an export quota of 20 billion units per year.…arrow_forward
- With its existing resources Country A can produce either 500 million bushels of wheat or 40 million cars. They are presently not engaged in trade and are choosing to produce and consume 375 million bushels of wheat and 10 million cars. The country decides to completely specialize in wheat production. They trade 100 million bushels of wheat in exchange for 12 million cars. After trade they can consume million more bushels of wheat and million more cars than they could before trade?arrow_forwardCreate a diagram similar to Figure 1.4 in which demand in both countries is identical and trade arises because of differences in supply. Do another diagram in which supply is identical across nations but differences in demand lead to trade.arrow_forwardWhich of the following would help to reduce imports? Select one: a) A fall in quotas b) Increased borrowings c) Fall in subsidy to domestic firms d) A fall in tariffs e) Decreased import substitutionarrow_forward
- Hello please provide homeowrk help with the following usung the image provided. Thank you.1. What is the opportunity cost of one more unit of Lumber in Country B and who has the comparative advantage in Wheat production? 2. What country has the comparative advantage in Lumber production? 3. What is the acceptable term of trade for which both countries will gain from trade?arrow_forwardA semiconductor is a key component in your laptop, cell phone, and iPod. The table provides information about the market for semiconductors in the United States. Producers of semiconductors can get $18 a unit on the world market. a. With no international trade, what would be the price of a semiconductor and how many semiconductors a year would be bought and sold in the United States? b. Does the United States have a comparative advantage in producing semiconductors. c. Draw a graph to illustrate the U.S. supply and demand market for semiconductors. What is the price with free international trade? What is the quantity of semiconductors produced in U.S. and total quantity bought by U.S. people and the quantity exported from other countries? d. Due to loss of competitiveness brought on by appreciation of the exchange rate and the high production costs, U.S. government reduce the export (or limit the supply of domestic producers) by imposing an export quota of 20 billion units per…arrow_forwardE4 Home’s demand curve for wheat is D = 200 − 40P Its supply curve is S = 40 + 40P Derive and graph Home’s import demand schedule. What would the price of wheat be in the absence of trade? Now add Foreign, which has a demand curve D∗ = 160 − 40P and a supply curve S ∗ = 80 + 40P 1. Derive and graph Foreignâs export supply curve and find the price of wheat that would prevail in Foreign in the absence of trade. 2. Now allow Foreign and Home to trade with each other, at zero transportation cost. Find and graph the equilibrium under free trade. What is the world price? What is the volume of trade? Home imposes a specific tariff of 0.5 on wheat imports. 1. Determine and graph the effects of the tariff on the following: (1) the price of wheat in each country; (2) the quantity of wheat supplied and demanded in each country; (3) the volume of trade. 2. Determine the effect of the tariff on the welfare of each of the following groups: (1) Home import-competing producers; (2) Home…arrow_forward
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education