Homework Answers
Due to the slow growth in demand for developing countries' products by developed countries, Developed countries' offer curve shifts a little upward. Whereas rapid growth in demand for developed countries' goods by developing countries', their offer curve shifts right. It leads to deterioration of terms of trade( measured by Relative price) for developing countries.
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Suppose that an offer curve diagram has developed countries exports on one axis and developing countries'...
. Suppose that an offer curve diagram has developed countries exports on one axis and developing...
. Suppose that an offer curve diagram has developed countries exports on one axis and developing countries' exports on the other axis. Explain the predicted impact, other things equal, on the terms of trade of developing countries of relatively slow growth in demand for developing countries goods by developed countries combined with relatively rapid growth in demand by developing countries for developed countries' goods. 8. In the past, the members of OPEC have been able to raise the relative price...
31. In deriving an offer curve for a country, if a higher price of exports/price of...
31. In deriving an offer curve for a country, if a higher price of exports/price of imports leads to a reduction in the quantity of exports which the country is willing to supply, then, in this range of the offer curve, the offer curve is said to be a. inelastic b. unit-elastic c. elastic d. inelastic, unit-elastic, or elastic - cannot be determined without more information 32. Suppose that country I is importing good Y and exporting good X. At...
33. If country I is trading in the inelastic range of country II's offer curve, then...
33. If country I is trading in the inelastic range of country II's offer curve, then the imposition of a tariff by country I, which still leaves country I in the inelastic range of country II's curve, will (assuming no retaliation) lead to in country I's terms of trade and to the volume of imports of country I. a. a deterioration; a decrease b. a deterioration; an increase c. an improvement; a decrease d. an improvement; an increase 34. In...
1.The following statements about intra-industry trade are true, except one. Which one? a. It reflects the...
1.The following statements about intra-industry trade
are true, except one. Which one?
a. It reflects the trade in similar goods between countries.
b. It results from economies of scale.
c. It results from comparative advantage.
d. It does not affect income distribution as much as
inter-industry trade.
2.Consider the following diagram. P is the autarky
production point, and C is the free trade consumption point.
P1 represents autarky prices and P2
represents free-trade prices.
In this case, the autarky consumption...
Consider the following diagram showing the AD curves in two different economies. One economy is Autarkland—it...
Consider the following diagram showing the AD
curves in two different economies. One economy is Autarkland—it
does not trade with the rest of the world (autarky is a
situation in which a country does not trade with other countries).
The other economy is Openland—it exports to and imports from the
rest of the world.
Explain why an increase in the domestic price level
(for a given exchange rate) reduces net exports in Openland. How
would you illustrate this with the...
sometimes the exports of developing nations are concentrated in only one or few primary products. for...
sometimes the exports of developing nations are concentrated in
only one or few primary products. for example world bank data,
tobacco consists 50% of Malawi's total exports. Therefore, changes
in demand or supply of tobacco can have significant effects on the
health of Malawi's economy
The current world price of tobacco is $5.00 per pound, but
there is uncertainty about the shape of the demand and supply
curves. Tbe following graphs (scenario A and Scenario B) show two
possiblilities for...
The Ricardian Model I Consider two countries, Brazil and Italy and two goods, bananas and apples....
The Ricardian Model I Consider two countries, Brazil and Italy and two goods, bananas and apples. In Brazil the number of working hours necessary to produce one kilo of apples and bananas is respectively equal to 3 and 2. In Italy the number of working hours necessary to produce one kilo of apples and bananas is instead equal to respectively 5 and 1. The labor supply in Brazil is equal to 1200 workers, while in Italy it is equal to...
Question 6 (10 points) Suppose that the demand decreased for 4K TVs and, at the same...
Question 6 (10 points) Suppose that the demand decreased for 4K TVs and, at the same time, the supply of 4K TVs increased. What would happen in the market of 4K TVs? Equilibrium price would decrease, but the impact on the equilibrium quantity would be ambiguous Equilibrium price would increase, but the impact on the equilibrium quantity would be ambiguous Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous Equilibrium quantity would increase, but the impact...
This is one big question Suppose the world has only two products (burgers and french fries)...
This is one big question Suppose the world has only two products (burgers and french fries) and only two countries (the US and Belgium). Trade in goods is completely free, and there are no assets in the world. Both countries are large enough to affect world prices. (a) Under free trade, the US produces 20 million burgers and 20 million french fries, while Belgium produces 1 million burgers and 2 million french fries. Which of the following describes the pattern...
Suppose a small country producing cars (C) and food (F) is closed to free trade. Its...
Suppose a small country producing cars (C) and food (F) is closed to free trade. Its production possibilities frontier (PPF) reflects increasing costs (it’s bowed out). Finally, preferences in this country are such that consumers like both goods equally: U(DC , DF ) = D 1 2 CD 1 2 F . (a) Using graphs, show the autarky equilibrium in this country. Show both (i) a graph of the PPF and indifference curve, and (ii) a graph of relative demand...
. Suppose that an offer curve diagram has developed countries exports on one axis and developing countries' exports on the other axis. Explain the predicted impact, other things equal, on the terms of trade of developing countries of relatively slow growth in demand for developing countries goods by developed countries combined with relatively rapid growth in demand by developing countries for developed countries' goods. 8. In the past, the members of OPEC have been able to raise the relative price...
31. In deriving an offer curve for a country, if a higher price of exports/price of imports leads to a reduction in the quantity of exports which the country is willing to supply, then, in this range of the offer curve, the offer curve is said to be a. inelastic b. unit-elastic c. elastic d. inelastic, unit-elastic, or elastic - cannot be determined without more information 32. Suppose that country I is importing good Y and exporting good X. At...
33. If country I is trading in the inelastic range of country II's offer curve, then the imposition of a tariff by country I, which still leaves country I in the inelastic range of country II's curve, will (assuming no retaliation) lead to in country I's terms of trade and to the volume of imports of country I. a. a deterioration; a decrease b. a deterioration; an increase c. an improvement; a decrease d. an improvement; an increase 34. In...
1.The following statements about intra-industry trade
are true, except one. Which one?
a. It reflects the trade in similar goods between countries.
b. It results from economies of scale.
c. It results from comparative advantage.
d. It does not affect income distribution as much as
inter-industry trade.
2.Consider the following diagram. P is the autarky
production point, and C is the free trade consumption point.
P1 represents autarky prices and P2
represents free-trade prices.
In this case, the autarky consumption...
Consider the following diagram showing the AD
curves in two different economies. One economy is Autarkland—it
does not trade with the rest of the world (autarky is a
situation in which a country does not trade with other countries).
The other economy is Openland—it exports to and imports from the
rest of the world.
Explain why an increase in the domestic price level
(for a given exchange rate) reduces net exports in Openland. How
would you illustrate this with the...
sometimes the exports of developing nations are concentrated in
only one or few primary products. for example world bank data,
tobacco consists 50% of Malawi's total exports. Therefore, changes
in demand or supply of tobacco can have significant effects on the
health of Malawi's economy
The current world price of tobacco is $5.00 per pound, but
there is uncertainty about the shape of the demand and supply
curves. Tbe following graphs (scenario A and Scenario B) show two
possiblilities for...
Question 6 (10 points) Suppose that the demand decreased for 4K TVs and, at the same time, the supply of 4K TVs increased. What would happen in the market of 4K TVs? Equilibrium price would decrease, but the impact on the equilibrium quantity would be ambiguous Equilibrium price would increase, but the impact on the equilibrium quantity would be ambiguous Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous Equilibrium quantity would increase, but the impact...
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