1. Fredonia is an endowment economy and small on world markets. It is endowed with Qc...
1. Fredonia is an endowment economy and small on world markets. It is endowed with Qc units of clothing and QF units of food. Everyone in Fredonia has identical tastes and endowments of food and clothing.
a. Use an indifference curve and budget line to show Fredonia in autarky. On your diagram indicate the endowment point, consumption point, the autarky level of welfare, and the autarky relative price of clothing. Briefly explain your diagram.
b. Fredonia now opens up to world trade and finds (compared with autarky) that the relative price of food is high on world markets. On your diagram from part a, show Fredonia under free trade. On your diagram, indicate the point of consumption, exports, imports, the free trade level of welfare, and the world relative price of clothing. Briefly explain your diagram.
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1. Fredonia is an endowment economy and small on world markets.
It is endowed with Qc...
4. Art Farmer lives in Fredonia which is an endowment economy. Art has an endowment of...
4. Art Farmer lives in Fredonia which is an endowment economy. Art has an endowment of Qc units of clothing and QF units of food. Briefly explain your answers. a. Use an indifference curve and budget line to show Art as a net seller of food in Fredonia prior to the opening to trade with the rest of the world. On your diagram indicate Art’s endowment, consumption, welfare and the relative price of clothing. Briefly explain your diagram. b. When...
2. a. The home country is endowed with QF units of food and QC units of...
2. a. The home country is endowed with QF units of food and QC units of clothing. Use an indifference curve diagram to show this economy freely trading such that they export clothing and import food. On your diagram, indicate the endowment and consumption points as well as exports and imports, and the world relative price. Note: Only show the free trade equilibrium in part a. Do not show the autarky equilibrium. b. On your diagram, show what would happen...
2. a. The home country is endowed with QF units of food and QC units of...
2. a. The home country is endowed with QF units of food and QC units of clothing. Use an indifference curve diagram to show this economy freely trading such that they export clothing and import food. On your diagram, indicate the endowment and consumption points as well as exports and imports, and the world relative price. Note: Only show the free trade equilibrium in part a. Do not show the autarky equilibrium. b. On your diagram, show what would happen...
2. Consider a country with Leontief preferences such that food consumption is always equal to two...
2. Consider a country with Leontief preferences such that food consumption is always equal to two times clothing consumption. The country's production possibility frontier (PPF) is described by QF-200-2Qc, where QF and Qc are production of food and clothing and where Qp> 0 and Qc>0 (i.e production cannot be negative) a. What is the pretrade relative price of clothing, pe? Explain. b. Derive algebraically the solution for pretrade consumption of food and clothing the point of production and consumption and...
Consider a small open economy (e.g. the Netherlands) producing two goods, clothing and food. The clothing...
Consider a small open economy (e.g. the Netherlands) producing two goods, clothing and food. The clothing industry uses capital (K) and labor (LC) as inputs, while the food industry uses land (La) and labor (LF ) as factors of production. The production technologies for the two industries are given by QC = K ¼ LC 3/4 ; QF = La1/2L F 1/2 . Also, the country is endowed with 216 units of capital, 360 units of labor, and 9 units...
Problem 1 A country (”Home”) is populated with 300 workers who produce either food (F) and/or...
Problem 1
A country (”Home”) is populated with 300 workers who produce
either food (F) and/or clothing (C). Each food worker produces 6
units of food and each clothing worker produces 3 units of
clothing. The preferences of the consumers over food and clothing
are represented by the utility function: u(DF ,
DC) = (DF ) 2/3 (DC)
1/3
1) Assuming that at the optimum, consumers set their marginal
rate of substitution, MRSDF ,DC , to the relative price,
i.e.,...
Problem. Home is an economy endowed with three production factors: labor (L), capital (K) and land...
Problem. Home is an economy endowed with three production factors: labor (L), capital (K) and land (T Home can produce cloth (Qc) with labor and capital, while producing food (QF) with labor and land. In this economy, labor is a mobile factor between the cloth and food industries. In contrast, capital is specific to the cloth industry, while land is specific to the food industry. Home's utility function, cloth production function, food production function are, respectively, given by U(Dc, Dr)...
3. a. Use a PPF and a community indifference curve to show a country initially exporting...
3. a. Use a PPF and a community indifference curve to show a country initially exporting food and importing clothing. On your diagram, show production, consumption, imports, exports and welfare, and indicate the relative price clothing. b. On the same diagram, show how immiserizing growth is possible. Include the new points of production and consumption as well as imports, exports, welfare and the new relative price of clothing. Explain fully.
2. (Ricardian Model) Two agricultural economies, "Home and "Foreign" produce corın (C) and wheat (W). Home...
2. (Ricardian Model) Two agricultural economies, "Home and "Foreign" produce corın (C) and wheat (W). Home has an endowment of 200 fields, each of which can produce either 2 units of corn or 2 units of wheat. Foreign has an endowment of 300 fields, each of which can produce either 1 unit of con or 2 units of wheat. Consus in both economies have identical homothetic preferences represented by the utility function: (a) Draw the production possibility frontiers for both...
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...
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...
2. Consider a country with Leontief preferences such that food consumption is always equal to two times clothing consumption. The country's production possibility frontier (PPF) is described by QF-200-2Qc, where QF and Qc are production of food and clothing and where Qp> 0 and Qc>0 (i.e production cannot be negative) a. What is the pretrade relative price of clothing, pe? Explain. b. Derive algebraically the solution for pretrade consumption of food and clothing the point of production and consumption and...
Problem 1
A country (”Home”) is populated with 300 workers who produce
either food (F) and/or clothing (C). Each food worker produces 6
units of food and each clothing worker produces 3 units of
clothing. The preferences of the consumers over food and clothing
are represented by the utility function: u(DF ,
DC) = (DF ) 2/3 (DC)
1/3
1) Assuming that at the optimum, consumers set their marginal
rate of substitution, MRSDF ,DC , to the relative price,
i.e.,...
Problem. Home is an economy endowed with three production factors: labor (L), capital (K) and land (T Home can produce cloth (Qc) with labor and capital, while producing food (QF) with labor and land. In this economy, labor is a mobile factor between the cloth and food industries. In contrast, capital is specific to the cloth industry, while land is specific to the food industry. Home's utility function, cloth production function, food production function are, respectively, given by U(Dc, Dr)...
2. (Ricardian Model) Two agricultural economies, "Home and "Foreign" produce corın (C) and wheat (W). Home has an endowment of 200 fields, each of which can produce either 2 units of corn or 2 units of wheat. Foreign has an endowment of 300 fields, each of which can produce either 1 unit of con or 2 units of wheat. Consus in both economies have identical homothetic preferences represented by the utility function: (a) Draw the production possibility frontiers for both...
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...
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