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  • 1. Visualizing the factor-endowment theory Consider the two hypothetical nations of Golikia and Ferville. Suppose they...

    1. Visualizing the factor-endowment theory Consider the two hypothetical nations of Golikia and Ferville. Suppose they both produce only two goods, robot vacuum cleaners and catnip toys. Each country faces a trade-off when producing the two goods. The following graph displays the respective production possibilities frontiers (PPF) for Golikia and Ferville. 20 18 olikia's PPF Terms of Trade 16 14...

  • 2 Autarky Equilibrium vs. Trade (80 points [10 per part]) Draw a PPF for The Federated...

    2 Autarky Equilibrium vs. Trade (80 points [10 per part]) Draw a PPF for The Federated States of Econesia (FSE) which can produce 1,000 diamonds if it devotes all resources to diamond production or 4,000 automobiles if it devotes all resources to automobile production. There is an increasing opportunity cost of producing each good a) Draw a point "A" on...

  • 6. Suppose that both Home and Foreign move from autarky to a free-trade regime and the...

    6. Suppose that both Home and Foreign move from autarky to a free-trade regime and the trade price of product X is 0.4Y. From the Hone perspective, the trade price is than the marginal cost of product X, which isSo, the Home economy under free trade. So, the X industry must A) smaller; 0.5Y; exit B) greater; 0.5Y; overtake C)...

  • Question 144 pts Dutch Disease is associated with a dramatic decline in the demand for a...

    Question 144 pts Dutch Disease is associated with a dramatic decline in the demand for a primary commodity produced by a country. True False Flag this Question Question 154 pts The Heckscher-Olin model uses differences in factor abundance to determine whether any nation has a comparative advantage in any good. True False Flag this Question Question 164 pts According to...

  • 7. Assume, for Vietnam, that the domestic price of textiles without international trade is lower than...

    7. Assume, for Vietnam, that the domestic price of textiles without international trade is lower than the world price of textiles. This suggests that in the production of textiles, a. Vietnam has a comparative advantage over other countries and Vietnam will import textiles. b. Vietnam has a comparative advantage over other countries and Vietnam will export textiles. c. other countries...

  • You are given the following information on unit labor requirements in Pugelovia and the rest of...

    You are given the following information on unit labor requirements in Pugelovia and the rest of the world (ROW):              aLin rice aL in cloth Pugelovia 0.75 1 ROW 0.5 0.5 You make the usual Ricardian assumptions. There are only two commodities, constant unit labor requirements and perfect competition in all markets. a. Which country has the absolute advantage in...

  • Illustrate on a graph the United States' move from autarky to free trade in the sugar...

    Illustrate on a graph the United States' move from autarky to free trade in the sugar market. Assume the world price for sugar is less than the autarky price in the US. A fully correct answer will have the following: A fully labeled graph of the US market for sugar including price, quantity, US supply, US demand, the autarky equilibrium,...

  • 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...

  • The following graph shows the domestic demand and domestic supply curves for lemons in New Zealand.

     5. Welfare effects of free trade in an exporting country Consider the New Zealand market for lemons. The following graph shows the domestic demand and domestic supply curves for lemons in New Zealand. Suppose New Zealand's government currently does not allow the international trade in lemons. Use the black point (plus symbol) to indicate the equilibrium price of a ton of lemons and...

  • Answer question 4 based on previous information. 1. Suppose that each worker in the home country...

    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...

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