Problem 1
BICYCLES | SKATEBOARDS | |
HOME | 5(hrs) | 2(hrs) |
FOREIGN | 3(hrs) | 3(hrs) |
HOME has 1000 hours of labour available.
FOREIGN has 1200 hours of labour available.
a. Draw the production possibility frontier for Home and Foreign.
b. In the absence of trade, what is the relative price of bicycles in terms of skateboards in each country?
c. Draw the world production possibility frontier clearly showing the case of specialization in comparative advantage and comparative disadvantage.
d. Trade is said to make each country better off by enlarging the range of consumption choices available to residents. Compare the consumption possibilities available to Home and Foreign consumers in the closed economy and open/trading economy cases. Graph the expanded consumption opportunities. The relative price of skateboards in terms of bicycles under free trade is 4/5.
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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...
Answer question 4 based on previous information. 1. Suppose that each worker in the home country can produce three loaves of bread or two shirts. Assume that Home has four workers a. Graph the production possiblities frontier for the Home country. b. What is the no-trade relative price for bread at Home? 2. Suppose that each worker in the Foreign country can produce two loaves of bread or three shirts. Assume that Foreign also has four workers. a. Graph the...
3. Suppose that Home and Foreign are the only countries in the world and that labor is the only productive input. At Home, it requires 1 hours of labor to produce 4 Airplanes (A) and 1 hours of labor to produce 5 Bicycles (B). In Foreign, it requires 1 hour of labor to produce 1 Airplane (A) and 1 hour of labor to produce 2 Bicycles (B). Assume that consumers in each country consume the amounts identified in the following...
These questions are about international trade. I want to know the answers. 5 Heckscher-Ohlin Model. Suppose the production of cloth is labour intensive and the production of food is land intensive and suppose the United States (US) is labour abundant and Canada is land abundant. (a) Show how the US production possibility frontier (PPF) differs from the Canadian PPF. Briefly explain. (Use the general version of the PPF's) (b) Which country will have the lower price of cloth Pc relative...
International Economics: Short Answer. Please be kind enough to answer all parts of the question. Partial answers will be downvoted. Point values are in parentheses. II Short Answers. Assume the Use the information below to answer question 1. 1. Ricardian model Each part is worth 2 points Marginal Product of Labor Cheese Wine 2 3 Home Draw the production possibilities frontier, with wine on the Assume that the a. horizontal axis and cheese on the vertical axis. home country labor...
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