Practice Problems - Tariffs, etc. 1) If Cloth is relatively labor intensive in production in the...
Practice Problems - Tariffs, etc.
1) If Cloth is relatively labor intensive in production in the UK and Steel is relatively capital intensive in production, what happens to the wage/rental ratio when the UK imposes an import tariff on cloth? What theorem is useful for arriving at your answer? Are the results different in the short run vs. the long run? Explain.
2) Country A has Demand and Supply for good X as a function of the price ratio of X and Y given by:
Qd = 10 - 1/2(Px/Py) and Qs = 1/2(Px/Py).
a) Graph (plot) the demand and supply of X.
b) Find the autarky price ratio in country A.
c) Next to a), graph (plot) the excess demand for X.
d) Calculate the equation for the excess demand for X.
e) What is another name for the excess demand?
3) Illustrate the redistributive, production, revenue, and consumption effects of the imposition of a tariff on good X by a small country. What is the net welfare effect on the country imposing the tariff and on the world?
4) Do 3) for a large country. What are the crucial differences?
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Practice Problems - Tariffs, etc.
1) If Cloth is relatively labor intensive in production in the...
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Which country exports good X, which country imports good X? Explain Mark is the relative price...
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Mark is the relative price line for country A and country B in
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This is all information given for the question. The
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47. If relatively capital-abundant country A opens trade with relatively labor-abundant country B and the trade takes place in accordance with the Heckscher-Ohlin theorem, what would be the consequence for factor prices (w/r) in the two countries? a. (w/r) rises in A and falls in B b. (w/r) rises in A and also rises in B c. (w/r) falls in A and rises in B d. (w/r) falls in A and also falls in B 48. Which one of the...
A depicts production and consumption in a closed economy with labor-intensive Wheat and capital- intensive Cloth. Capital and labor are both perfectly mobile across sectors CHOS model). Read all the questions, think carefully and plan your answer before drawing Cloch Wheat (i.e. the Suppose the country opens to trade and this leads to an increase in domestic relative price of wheat rises to now equal the world relative price of wheat). a) Assume actors in the economy respond to the...
Which country exports good X, which country imports good X?
Explain
Mark is the relative price line for country A and country B in
the graph before trade.
At Autarky (pre-trade), which point represents production point
for country A? Which point represent consumption point for country
A?
At Autarky (pre-trade), which point represents production point
for country B? Which point represent consumption point for country
B?
With free trade, which point represents production point for
country A? Which point represent...
International trade, The standard model
This is all information given for the question. The
PPF has to be drawn with help of the information that A is
relatively capital-abundant and that productiok of X is relatively
capital intensive.
Chapter 6, The Standard Model 1. Countries A and B have two factors of production- labour and capital, which have some degree of substitutability. Country A is relatively capital-abundant. They each have the ability to produce two goodsX and Y. Production of...
Need help with this homework.
Assume that Sapello is a labor abundant country and that Pojoaque is capital abundant. Further assume chili production is labor intensive and wine production is capital intensive. Note: Please show your work. Partial credit will be given, but I need to see your work. 1. (2 points) Suppose Sapello is considering a tariff on wine from Pojoaque. Using a supply and demand graph show the welfare effects of a tariff in Sapello on wine from...
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