QUESTION 5 There are two countries: A and B. Here, we consider the trade equilibrium with transportation costs. There are four homogeneous goods and one input (labor). Unit labor requirements are given in the following table. In addition, the free-trade wage rate in A is $1, and that in B is $2. Finally, we assume it costs $2 to transport goods from the other country. Which product(s) will not be traded between the two countries? Units of labor required per unit of output A 9 7 5 3 Textile Fish Soybean Com B 2 3 3 4
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- c) Now, assume that each country has to use its own labour to transport goods from the other country. Suppose that it takes 1 worker to bring an imported unit of the good Northland specializes in, into Southland. Also, suppose that it takes 1 worker to bring an imported unit of the good Southland specialises in, into Northland. Will trade take place? ExplainSuppose 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.Suppose that Egypt produces cotton and lamb, and that it has comparative advantage in cotton. Draw Eqypt's non-linear (i.e., concave) PPF and FTBL, with cotton on the horizontal axis and lamb on the vertical axis. Be sure to label the axes, the PPF, the FTBL and the autarky and free trade prices. Also show the quantities of imports and exports. (Note, there are no values for the prices, so just show the price ratio and how it's represented in the graph.)
- Consider two countries, home and foreign and a single good, Y. Assume that home country imports good Y fromforeign country. The import demand curve for good Y in home country is given by: MD = 170 – 2PY and theexport supply curve for good Y in Foreign country is given by: EX = PY – 40.Part A. What is the free trade price of good Y? Show your work. Part B. How many units of good Y are traded under free trade? Show your work. Part C. If home country imposes a specific tariff of $15 per unit of good Y imported, what is the price of goodY that Foreign exporters receive? Show your work. Part D. If home country imposes a specific tariff of $15 per unit of good Y imported, what is the price of goodY that Home consumers pay? Show your work. Part E. If home country imposes a specific tariff of $15 per unit of good Y imported, how many units of goodY are traded now? Show your work. Part F. If home country imposes a specific tariff of $15 per unit of good Y imported, what is the tariffrevenue?…мсаз Austria can produce 1 unit of food using 12 hours of labour time and 1 unit of machinery using 4 hours. In Greece it takes 8 hours of labour time to produce 1 unit of food and 4 hours to produce 1 unit of machinery. These productivity conditions imply: A I do not want to answer this question. Austria has an absolute advantage in machinery production C Greece has an absolute advantage in machinery production Austria has a comparative advantage in machinery production E Neither country has a comparative advantage in machinery production F Greece has a comparative advantage in machinery productionA free-trade equilibrium exists in which United States exports Food and imports clothing from China. The goods are produced with two factors: capital and labour. The trade pattern is the one predicted by the H-O theory. a. Show standard trade model graphically and explain the effect on quantities produced, quantities consumed and welfares of free trade in the United States and China respectively.b. Show graphically an increase now occurs in the U.S. endowment of capital, its abundant factor.1. What is the effect on the shape and position of the U.S. production-possibility curve?2. What is the effect on the actual production quantities in the United States if the relative product price is unchanged? Explain.
- Assume that Germany has 1200 units of labor available and it can produce two goods: apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. France has a labor force of 800. France’s unit labor requirement in apple production is 5, while in banana production it is 1. Suppose that Germany does not specialize in the production of the commodity in which it has a comparative advantage but it opens up for trade at the autarky production level. Compare the welfare of the country with the case when country specializes.Many U.S. firms import products or parts from other countries indstead of producing them domestically. In fact, most iPhones are other smartphones are made not in the U.S. but in China. Many politicians, notably Presidents Trump and Biden, and commentators argue that the government should protect domestic jobs in this country by penalizing the practice of importing from other countries. How are Americans affected by this practice? Does this hurt Americans by international trade as they are consumers and ordinary resident in the U.S.?The economic basis for trade is O none of these. O speculative attacks. O insourcing. O comparative advantage. O the race to the bottom.
- Suppose there are two countries Peru and Japan that produces 7,523 units ofFood 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 5,000. d) Which country has the comparative advantage in food? In fuel? Explain. e) Which good(s) should each country specialized in?10. We have focused on the case of trade involving only two countries. Suppose that thereare many countries capable of producing two goods, and that each country has onlyone factor of production, labor. What could we say about the pattern of productionand trade in this case? (Hint: Try constructing the world relative supply curve.)can you help me rewording this paragraph? Since Ghana and Côte d'Ivoire have similar environment, level of education and institutional background, the imports, and exports from Ghana to Côte d'Ivoire and from Côte d'Ivoire to Ghana is result of intra industry trade. Intra industry trade is the trading of goods within the same industries from one nation to another. So, the trade between these two countries in this case cannot be explained by comparative advantage. It can be explained with economies of scale. Ghana's agricultural exports to Switzerland and Switzerland differ from Ghana in many aspects. Thus, indeed, trade between the two countries can be explained by a comparative advantage. Ghana can grow food at a lower opportunity cost than Switzerland and thus has a competitive advantage over food. In Switzerland, food processing was also rendered at higher opportunity costs. Therefore, by trading with each other, both countries can gain from trade and Ghana can export food to…