Homework Answers
Use indifference curve as an indicator of national welfare to evaluate the following statement. " suppose the price of a country's export increases related to its import. This only benefits the country if it increases its quantity of exports in responce. If a country does not increase exports when there relative prices rises then the price increase will not increase welfare"
The above mention statement is not right because when the price of a country's export rises the country can purchase and enjoy a huge quantity of imports in exchange for its exports, even if it remains the quantity of exports fixed or even decreased that quantity somewhat.
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4. (15 points) Use indifference curves as an indicator of national welfare to evaluate the following...
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.
(a) Home Market (b) Import Market Price Price Deadweight loss due to the tariffb+d S, S2 D2D Quantity Imports FIGURE 8-5 Effect of Tariff on Welfare The tariff increases the price from PW to pW+ t. A...
(a) Home Market (b) Import Market Price Price Deadweight loss due to the tariffb+d S, S2 D2D Quantity Imports FIGURE 8-5 Effect of Tariff on Welfare The tariff increases the price from PW to pW+ t. As a result, consumer surplus falls by (a + b+ c+ ). Producer surplus rises by area a, and government revenue increases by the area c. Therefore, the net loss in welfare, the deadweight loss to Home, is (b + a), which is measured...
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...
17. In the following graph showing indifference curves for country A (a) and for country B...
17. In the following graph showing indifference curves for country A (a) and for country B (b) in a situation where both countries have the same production possibilities frontier, in autarky, Px/Py in country A is Px/Py in country B, and, if trade begins, country A will export good good Y sood X a. less than; X b. less than; Y c. greater than; X d. greater than; Y 18. Given the following diagram showing a fixed-quantity production-possibilities frontier, a...
The diagram below pictures the economy of a country capable of producing steel and wheat. It...
The diagram below pictures the economy of a country capable of producing steel and wheat. It is currently engaged in international trade with another country. The diagram includes a production possibility frontier, an indifference curve the country finds itself at, and an isovalue line. Referencing slides 56-59 should help you complete the assignment Wheat, min tons JULLILUL 12 UIT INT I LLLLL / 6 Steel, O s 10 15 20 25 30 mln tons a. Label the production (P) and...
HW Tariff: Large Country Case Suppose that there are only two trading countries: one importing country...
HW Tariff: Large Country Case Suppose that there are only two trading countries: one importing country and one exporting country. The supply and demand curves for the two countries are shown below. Prr is the free trade equilibrium price. At that price, the excess demand by the importing country equals excess supply by the exporter. Welfare Effects of a Tariff: Large Country Case Importing Country Exporting Country P A D H b C C PT E PT C F G...
2. Use the Heckscher-Ohlin model to consider the production of hand-made pottery and silicon microchips in...
2. Use the Heckscher-Ohlin model to consider the production of hand-made pottery and silicon microchips in the UK and India. (a) Which country would you expect to be relatively labor abundant, and which relatively capital abundant? Why? (b) Which industry would you expect to be relatively labor intensive, and which capital intensive? Why? (c) Given your answers to (a) and (b), draw PPFs for each country. Assuming preferences are the same, add indifference curves and relative autarky price lines. What...
QUESTION 3 10 points Save Answer Select all that are true regarding Quantitative Easing (QE): The...
QUESTION 3 10 points Save Answer Select all that are true regarding Quantitative Easing (QE): The risks of QE include uncertainty over inflation expectations since it has never been done and it involves massive increases in the money supply, a lack of incentives to borrow since interest rates are so low for so long, and a disincentive for banks to lend due to regulatory uncertainty QE is expressly designed to depreciate the domestic currency via increases in the supply of...
Home Fareign Cheese Wine Labor Force 100 200 Several questions require drawing graphs. In these cases...
Home Fareign Cheese Wine Labor Force 100 200 Several questions require drawing graphs. In these cases you should graph carefully, either using graph paper à computer, or if you graph by hand, a ruler to show exact amaunts an the vertical and horizantal axes à. Whith country has an absolute advantage in producing cheese? Which country has an absolute advantage in producing wine? b. Whith country has a comparative advantage in producing cheese? Which country has a comparative advantage in...
(a) Home Market (b) Import Market Price Price Deadweight loss due to the tariffb+d S, S2 D2D Quantity Imports FIGURE 8-5 Effect of Tariff on Welfare The tariff increases the price from PW to pW+ t. As a result, consumer surplus falls by (a + b+ c+ ). Producer surplus rises by area a, and government revenue increases by the area c. Therefore, the net loss in welfare, the deadweight loss to Home, is (b + a), which is measured...
17. In the following graph showing indifference curves for country A (a) and for country B (b) in a situation where both countries have the same production possibilities frontier, in autarky, Px/Py in country A is Px/Py in country B, and, if trade begins, country A will export good good Y sood X a. less than; X b. less than; Y c. greater than; X d. greater than; Y 18. Given the following diagram showing a fixed-quantity production-possibilities frontier, a...
The diagram below pictures the economy of a country capable of producing steel and wheat. It is currently engaged in international trade with another country. The diagram includes a production possibility frontier, an indifference curve the country finds itself at, and an isovalue line. Referencing slides 56-59 should help you complete the assignment Wheat, min tons JULLILUL 12 UIT INT I LLLLL / 6 Steel, O s 10 15 20 25 30 mln tons a. Label the production (P) and...
HW Tariff: Large Country Case Suppose that there are only two trading countries: one importing country and one exporting country. The supply and demand curves for the two countries are shown below. Prr is the free trade equilibrium price. At that price, the excess demand by the importing country equals excess supply by the exporter. Welfare Effects of a Tariff: Large Country Case Importing Country Exporting Country P A D H b C C PT E PT C F G...
QUESTION 3 10 points Save Answer Select all that are true regarding Quantitative Easing (QE): The risks of QE include uncertainty over inflation expectations since it has never been done and it involves massive increases in the money supply, a lack of incentives to borrow since interest rates are so low for so long, and a disincentive for banks to lend due to regulatory uncertainty QE is expressly designed to depreciate the domestic currency via increases in the supply of...
Home Fareign Cheese Wine Labor Force 100 200 Several questions require drawing graphs. In these cases you should graph carefully, either using graph paper à computer, or if you graph by hand, a ruler to show exact amaunts an the vertical and horizantal axes à. Whith country has an absolute advantage in producing cheese? Which country has an absolute advantage in producing wine? b. Whith country has a comparative advantage in producing cheese? Which country has a comparative advantage in...
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