The Ricardian Model II Consider two countries, Spain and Russia, pro- ducing two goods, Vodka and...
The Ricardian Model II Consider two countries, Spain and Russia, pro- ducing two goods, Vodka and Wine. Labor is the only factor of production and producing one liter of wine requires two hours of work in Spain and five in Russia. At the same time, the production of one liter of vodka requires two hours of work in both Spain and Russia. Wages in Spain are fifty percent higher than in Russia.
(a) What is the cost of producing wine in Spain relative to Russia? What is the cost of producing vodka in Spain relative to Russia?
(b) In absence of transportation costs will Spain and Russia trade? How will they specialize in the production of the two goods?
(c) Suppose now that transportation costs are equal to 100% of the production costs. What will happen to trade between Spain and Russia? Provide an analytic answer to your question.
Homework Answers
Add Answer to:
The Ricardian Model II Consider two countries, Spain and Russia, pro- ducing two goods, Vodka and...
The Ricardian Model I Consider two countries, Brazil and Italy and two goods, bananas and apples....
The Ricardian Model I Consider two countries, Brazil and Italy and two goods, bananas and apples. In Brazil the number of working hours necessary to produce one kilo of apples and bananas is respectively equal to 3 and 2. In Italy the number of working hours necessary to produce one kilo of apples and bananas is instead equal to respectively 5 and 1. The labor supply in Brazil is equal to 1200 workers, while in Italy it is equal to...
Consider the Ricardian trade model with zero tariffs and transportation costs between two countries (a) Are...
Consider the Ricardian trade model with zero tariffs and transportation costs between two countries (a) Are the output prices equalized between the two trading countries? Explain. No because τ -7 n processo ]he
Consider two countries, Spain and Italy, where the only two factors of production are capital and...
Consider two countries, Spain and Italy, where the only two factors of production are capital and labor. Spain has 100 units of capital and 400 units of labor and Italy has 200 units of capital and 100 units of labor. Both countries produce two goods, cheese and suits. The labor share in total production costs is 75% for cheese but only 25% for suits. (2 points for each part) A. Which country is labor abundant? Explain. B. Which good is...
Consider the following Ricardian model with two countries and two goods, tuna and erasers. Switzerland has...
Consider the following Ricardian model with two countries and two goods, tuna and erasers. Switzerland has 300 units of labor available; the unit labor requirement for tuna is 2 and 6 for erasers. Croatia has 200 units of labor available; the unit labor requirement for tuna is 2 and 4 for erasers. a) What is the opportunity cost of producing a tuna in Switzerland? In Croatia? b) Construct the world relative supply curve. Your Y axis should be la- beled,...
. In a two-country, two-product Ricardian model, the statement "Germany has a comparative advantage over France...
. In a two-country, two-product Ricardian model, the statement "Germany has a comparative advantage over France in car production relative to ship production" is equivalent to (a) France having a comparative advantage over Germany in ship production. (b) France having a comparative disadvantage compared to Germany in car pro- duction and ship production (c) Germany having a comparative advantage over France in car production and ship production d) France having no comparative advantage over Germany e) France should produce cars....
Gains from Trade Portugal and Spain produce and consume two commodities, Wine (W) and Cheese (C)....
Gains from Trade Portugal and Spain produce and consume two commodities, Wine (W) and Cheese (C). Labor (L) is the only factor of production in both countries. Commodity and labor markets in the two countries are perfectly competitive. In Portugal, it takes 8 labor hours for the production of a bottle of W and 6 labor hours for the production of one kg of C. In Spain, it takes 10 labor hours for the production of a bottle of W...
Consider a general model of Ricardian trade with 2 countries (Home and Foreign) and 2 goods...
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):...
24. Refer to Table 3-2. Suppose that both countries fully specialize in the good in which...
24.
Refer to Table 3-2.
Suppose that both countries fully specialize in the good in
which they have a
comparative advantage. Both countries have 1,000 hours of labor
to devote to production. What is an
example of a mutually beneficial trade?
a.
Spain gives 50 bottles of olives to Italy in exchange for 50
bottles of wine.
b.
Spain gives 50 bottles of olives to Italy in exchange for 150
bottles of wine.
c.
Spain gives 50 bottles of wine...
Consider a two countries, Portugal and England, that produce two goods, wine and cheese, with only...
Consider a two countries, Portugal and England, that produce two goods, wine and cheese, with only one factor of production, Labor. In England, one unit of labor can produce 2 units of wine or 1 unit of cheese. In Portugal, one unit of labor can produce 3 units of wine or 1/2 of cheese. There are 100 units of labor in Portugal, and 100 in England. Countries share the same tastes, and there is perfect competition. 1) Fill in the...
Consider a Ricardian model. There are two countries called Australia and New Zealand and two goods called beer and chees...
Consider a Ricardian model. There are two countries called Australia and New Zealand and two goods called beer and cheese. In Australia the unit labour requirement for a beer is 10 hours and for a cheese is 10 hours. In New Zealand the unit labour requirement for a beer is 4 hour and for a cheese is 1 hour. Australia has an endowment of 2000 hours of labour. New Zealand has an endowment of 400 hours of labour. 1 Draw...
Consider the Ricardian trade model with zero tariffs and transportation costs between two countries (a) Are the output prices equalized between the two trading countries? Explain. No because τ -7 n processo ]he
Consider the following Ricardian model with two countries and two goods, tuna and erasers. Switzerland has 300 units of labor available; the unit labor requirement for tuna is 2 and 6 for erasers. Croatia has 200 units of labor available; the unit labor requirement for tuna is 2 and 4 for erasers. a) What is the opportunity cost of producing a tuna in Switzerland? In Croatia? b) Construct the world relative supply curve. Your Y axis should be la- beled,...
. In a two-country, two-product Ricardian model, the statement "Germany has a comparative advantage over France in car production relative to ship production" is equivalent to (a) France having a comparative advantage over Germany in ship production. (b) France having a comparative disadvantage compared to Germany in car pro- duction and ship production (c) Germany having a comparative advantage over France in car production and ship production d) France having no comparative advantage over Germany e) France should produce cars....
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):...
24.
Refer to Table 3-2.
Suppose that both countries fully specialize in the good in
which they have a
comparative advantage. Both countries have 1,000 hours of labor
to devote to production. What is an
example of a mutually beneficial trade?
a.
Spain gives 50 bottles of olives to Italy in exchange for 50
bottles of wine.
b.
Spain gives 50 bottles of olives to Italy in exchange for 150
bottles of wine.
c.
Spain gives 50 bottles of wine...
Most questions answered within 3 hours.
-
Rice Products in Bangladesh
Business behavior is derived in large part from the basic cultural
environment...
asked 33 minutes ago -
The following base sequence is found for a mRNA fragment from
wild-type E. coli: 5'- UAUCAGUAGAUAAUGUAACC-3'...
asked 56 minutes ago -
For this exercise, round all regression parameters to three
decimal places.
One of the two tables...
asked 1 hour ago -
What is the 5% level of significance for mean = 3.60, standard
deviation = 0.94, and...
asked 1 hour ago -
Prior to beginning work on this discussion, please read the
article by Hayley Peterson, 15 Companies...
asked 1 hour ago -
Which pair of aqueous solutions, when mixed, will form a
precipitate?
A) NaNO3 and AgC2H3O2
B)...
asked 2 hours ago -
1-Write an algorithm to get two numbers from the user (as
inputs) and calculate the sum...
asked 5 hours ago -
Define white-collar crime. What is the difference between
offender and offense-based definitions of white-collar crime? What...
asked 6 hours ago -
Consider a reaction which is 1st order with respect to A and 1st
order with respect...
asked 6 hours ago -
c++
The length of the hypotenuse of a right-angled triangle is the
square root of the...
asked 6 hours ago -
When a metal rod is heated, not only its resistance but also its
length and cross‐sectional...
asked 6 hours ago -
write a c++ program that computes the L^1 - Norm of a given
vector (L^1 norm...
asked 6 hours ago