Consider a 2-good 2-country Ricardian model of trade where labour productivity differences are due to different levels of “institutions”. The 2 goods are airplanes and frozen chicken and the 2 countries Japan and Mozambique. The unit labour requirements are given in the table below. a. Give one reason why “institutions” may affect labour productivity differently for the 2 goods. b. Which country has a comparative advantage in frozen chicken? Explain which steps you take to find this answer. c. Assume Japan has a labour force of 1000. Draw its production possibility frontier. d. Let’s say Japan is in autarky and consumes 100 airplanes and 300 chickens. Could it do any better than this without opening up to trade? e. Can Japan gain from trade with Mozambique? Show it graphically.
Consider a 2-good 2-country Ricardian model of trade where labour productivity differences are due to different...
Consider a 2-good 2-country Ricardian model of trade where labour productivity differences are due to different levels of “institutions”. The 2 goods are airplanes and frozen chicken and the 2 countries Japan and Mozambique. The unit labour requirements are given in the table below. 2. Institutions as a source of comparative advantage Consider a 2-good 2-country Ricardian model of trade where labour productivity differences are due to different levels of "institutions". The 2 goods are airplanes and frozen chicken and...
Ricardian Model of Trade given unit labor requirements for two countries. Please do c, d, e Assume Japan has a labour force of 1000. Draw its production possibility frontier Let's say Japan is in autarky and consumes 100 airplanes and 300 chickens. Could it do any better than this without opening up to trade? Can Japan gain from trade with Mozambique? Show it graphically. c. d. e. JapanMozambique a。.=10 Airplane a 4 Frozen chicken
Question 1 Use the 2-country Ricardian model with free trade (graphically, using standard graphs) to work out the effects of the following changes (one at a time) on the Home and Foreign terms of trade and welfare. Assume that two goods, Food and Cloth, are produced and consumed, Home country has a comparative advantage in Food, and that in the initial equilibrium, both countries specialize completely. Assume that preferences are identical and homothetic in the two countries. (a) A decrease...
Consider a general model of Ricardian trade with 2 countries (Home and Foreign) and 2 goods (Clothing and Food): unit labor costs are aLC and aLF in Home and a∗LC and a∗LF in Foreign. Home and Foreign are endowed, respectively, with L and L∗ units of labor. Workers in both countries have the same preferences represented by a Cobb-Douglas utility function: Consider a general model of Ricardian trade with 2 countries (Home and Foreign) and 2 goods (Clothing and Food):...
Problem 1. (10 points.) This problem is based on the Ricardian Model. Assume that 2 countries, Gryffindor and Slytherin, use troll labor to produce 2 goods, swords and brooms. (a) In Gryffindor, 1 troll can produce 2 swords or 4 brooms, while in Slytherin the production of 1 sword requires 5 trolls and the production of 1 broom requires 2 trolls. Assume that there are 100 trolls in each country. Draw a PPF for each country. (b) Which country has...
Question 1: Consider the following Ricardian Model with 2 economies: Germany England Labor Supply 200 workers 200 workers Wine 1000 units/worker 800 units/worker Beer 400 units/worker 300 units/worker (c) Provide the range of the international relative price of wine at which the two countries would trade. (d) Show graphically that Germany gains from trade. Carefully label your graph. (e) Which country has higher wages? What determines the real wage at the national level? Explain. (f) Calculate real wages in France...
10 ( 1JW al questions) 01. (20 marks) Assume a Ricardian model. Home needs 3 units of labour to pro food and 2 units of labour to produce a unit of cloth home needs 3 units of labour to produce a unit of units of labour to produce a unit of clothes. The foreign country needs 3 unit of labour to produce a unit of food and 1 unit of labou oduce a unit of food and 1 unit of...
respectively. [Here you have to use the CORREL command in Excel]. DO NOT ATTACH YOUR DATA TECHNICAL ANALYSIS For technical analysis, you need to follow Step 4. Step 4. In order to conjecture the circumstances in these two countries under autarky (when there is no trade), consider the following hypothetical scenario based on Ricardian model. Assume throughout that those two countries (Italy and Sweden) are the only two countries in the world, at least for purposes of trade. There are...
Matching the concepts with their explanations A model shows that bilateral trade is directly based on economic sizes but indirectly affected by distance between two countries. A Ricardian Model A model states that international trade is a zero-sum game 2 Adam Smith view of International Trade and a country should maintain a positive trade balance. A trade model states that a country should export the goods for which it has the comparative advantage (lower opportunity cost) Neoclassical Model 3 Also...
Consider two countries that produce cloth and widgets with labour as the unique production factor using a linear technology. Given the following information: Unit Produced by One Worker/Hour Cloth Widgets Home 200 400 Foreign 120 60 i. What is the opportunity cost of cloth in terms of widgets for the Home country? For the Foreign country? (5 points) ii. In which good does the Home country have comparative advantage? Why? (5 points) ii. Assume that on the world market one...