International Economics
16th Edition
ISBN: 9781305887633
Author: Robert Carbaugh
Publisher: Cengage Learning
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Question
Chapter 2, Problem 13SQ
(a)
To determine
The trade of steel and auto in Country J and Country S.
(b)
To determine
The trade of steel and auto in Country J and Country S.
(c)
To determine
The trade of steel and auto in Country J and Country S.
(d)
To determine
The trade of steel and auto in Country J and Country S.
(e)
To determine
The trade of steel and auto in Country J and Country S.
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Assume Bolivia and Chile use the same amount of resources to produce tin and copper. The following graphs represent their
production possibilities curves.
Bolivia
Chile
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8.
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8.
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Tons of
copper
Tons of copper
Chile has a comparative advantage in the production of which metal?
Chile has a comparative advantage in the production of (Click to select) v
Tons of tin
Tons of tin
20 18 16 14 12 10 g 6 2 Chile's Production Possibilities Frontier soybeans (in pound) 2 4 L Chile: S= and C= 5 L L Colombia: S=- and C= 2 S Chile: S= and C= 4 L 10 12 14 16 18 20 comme (in pound) Assume Chile and Colombia both have 48 labor hours available. Which of the following of production functions would yield each countries' PPF? S S 4 8 Chile: S= and C= L L Colombia: S= and C= 3 L and C C 6 L C 3 L 4 L C 4 L Colombia's Production Possibilities Frontier soybeans (in pound) C 20 18 16+ H+ 12 10 8 6 2 4 6 % 12 14 16 18 20 co (in pounds)
Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000.
(g) If the terms of trade is 2 to 1 in favour of the country with the comparative advantage in food. Determine the combination of the two goods that each country will consume after trade if the country with the comparative advantage in fuel imports 4000 units of food. Label this point B and B* respectively.
h) Who gains from trade? Who loses? What is the impact if any on the world?
(i) What should the terms of trade be to make trade beneficial for BOTH Japan and Peru? Explain.
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