(a) (b) (c) (d) (e) (h) Britain and France are countries in a Ricardian trade model....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
(a) (b) (c) (d) (e) (h) Britain and France are countries in a Ricardian trade model. Each country produces wine and bread. Unit labour requirement for wine in Britain, in hours: alw = 12 Unit labour requirement for bread in Britain, in hours: aLB = 3 Unit labour requirement for wine in France, in hours: alw= 2 Unit labour requirement for bread in France, in hours: aLB = 1 Britain and France both have 600 hours of labour available. Qw and QB are the quantities of wine and bread produced in Britain. Qw and Q are the quantities produced in France. Explain what is meant by the "unit labour requirement in hours". Calculate labour productivity, in terms of units produced per hour, for each good in each country. Explain which country has the comparative advantage in wine production, and why. Under autarky, calculate the relative price of wine in each country. With wine on the y-axis and bread on the x-axis, draw and label the production possibility frontiers for both countries. Label the axes. Now assume there is free trade. On a new diagram, show the world relative supply of wine, giving world relative price on the y-axis as Pw PB and world relative quantity on the x-axis as Qw + Qw QB +QB Relative world demand is given by: PB DB + DB Pw where Dw + Dw is world quantity demanded of wine and DB + Dg is world quantity demanded of bread. Use the given equation to draw the relative demand curve and give the equilibrium relative price under free trade. Dw + Dw = 6 Redraw the production possibility frontier diagram for France, but now show the frontier both under autarky and after trade. Under the assumption that consumers in France want the same mix of both goods as the rest of the world, use the diagram to illustrate the gains from trade. Explain in words why a country that is more efficient in producing both goods can still gain from trade. (a) (b) (c) (d) (e) (h) Britain and France are countries in a Ricardian trade model. Each country produces wine and bread. Unit labour requirement for wine in Britain, in hours: alw = 12 Unit labour requirement for bread in Britain, in hours: aLB = 3 Unit labour requirement for wine in France, in hours: alw= 2 Unit labour requirement for bread in France, in hours: aLB = 1 Britain and France both have 600 hours of labour available. Qw and QB are the quantities of wine and bread produced in Britain. Qw and Q are the quantities produced in France. Explain what is meant by the "unit labour requirement in hours". Calculate labour productivity, in terms of units produced per hour, for each good in each country. Explain which country has the comparative advantage in wine production, and why. Under autarky, calculate the relative price of wine in each country. With wine on the y-axis and bread on the x-axis, draw and label the production possibility frontiers for both countries. Label the axes. Now assume there is free trade. On a new diagram, show the world relative supply of wine, giving world relative price on the y-axis as Pw PB and world relative quantity on the x-axis as Qw + Qw QB +QB Relative world demand is given by: PB DB + DB Pw where Dw + Dw is world quantity demanded of wine and DB + Dg is world quantity demanded of bread. Use the given equation to draw the relative demand curve and give the equilibrium relative price under free trade. Dw + Dw = 6 Redraw the production possibility frontier diagram for France, but now show the frontier both under autarky and after trade. Under the assumption that consumers in France want the same mix of both goods as the rest of the world, use the diagram to illustrate the gains from trade. Explain in words why a country that is more efficient in producing both goods can still gain from trade.
Expert Answer:
Answer rating: 100% (QA)
a The unit labour requirement in hours refers to the amount of labor input measured in hours required to produce one unit of a particular good It represents the labor productivity of a country in prod... View the full answer
Related Book For
Organic Chemistry
ISBN: 978-1118133576
11th edition
Authors: Graham Solomons, Craig Fryhle, Scott Snyder
Posted Date:
Students also viewed these economics questions
-
Assume for simplicity that these payments continue for 20 years and then cease. The interest rate is 4% . You plan to cover this obligation by investing in 5- and20-year maturity Treasury strips.(a)...
-
Calculate the minimum replenishment time for the Model A fountains given the beginninginventories. Usage Lead Time Beginning Component Parent Parent (weeks) Inventory Immediate per none 750 750 1000...
-
Organizational culture plays a crucial role in shaping the behavior, attitudes, and performance of employees within an organization. As a leader, how can you create and nurture a positive...
-
Write a reflective paper about Disability Network West Michigan
-
Effects of Darden Restaurants Changes in Current Assets and Liabilities on Its Statement of Cash Flows The following items, listed in alphabetical order, are included in the Current Liabilities...
-
True or false: The circuit for a DEMUX is basically the same as for a decoder.
-
Washington Tennis & Education Foundation, Inc. (WTEF) is a nonprofit organization operating in the District of Columbia that provides athletic and academic programs for children from low-income...
-
Clampett Oil purchases crude oil products from suppliers in Texas (TX), Oklahoma (OK), Pennsylvania (PA), and Alabama (AL), from which it refines four end-products: gasoline, kerosene, heating oil,...
-
The OLAP (Online Analytical Processing) discussion gives examples of multidimensional information. Give your own example of useful three-dimensional information.
-
Consider the December transactions for Crystal Clear Cleaning that were presented in Chapter 5. Crystal Clear uses the perpetual inventory system. Dec. 2 Purchased 475 units of inventory for $2,850...
-
Prices and dividends on ordinary shares in Taylor Limited are shown below in cents per share. DATE 31/12/2015 $15.92 31/12/2016 $18.08 $0.21 31/12/2017 $14.36 $0.21 31/12/2018 $15.74 $0.13 $20.21...
-
Who is Ignatius of Loyola?
-
Why do leaders engage in dark and destructive behaviors?
-
With the advent of big data and increased computing power, some people have advocated for monetary policy by algorithm. Basically, real-time data is fed into a computer program, which then determines...
-
What is the fate of the younger generation of African leaders who seem to be a hybrid of Westernization and Africanism? Would they be leading subsequent generations of Africans farther away from...
-
How can community-based approaches to leadership support sustainable development and responsible futures?
-
Which of the following molecules can form hydrogen bonds? Check all that apply. ammonia, NH3 U H hydrogen bromide, HBr H -Br: water, HO H H H butane, C4H10 H H H hydrogen, H H H H H H H H
-
Figure displays a 12.0 V battery 3 four uncharged capacitors of capacitances C1 = 4.00F, C2 = 6.00F, and C3 = 3.00F. The switch is thrown to the left side until capacitor 1 is fully charged. Then the...
-
Outline all steps in a synthesis that would transform 2-propanol (isopropyl alcohol) into each of the following: (a) (b) (c) (d) (e) CI
-
Give IUPAC names for each of the following. a. b. c. Br
-
Predict the bond angles of (a) F2C==CF2 (b) CH3Ci==CCH3 (c) HCi==N
-
Based on Exhibits 1 and 2, to attempt to profit from the short-term excess return forecast, Capara should increase KUEs portfolio allocation to: A. developed markets equity and decrease its...
-
Which of Caparas statements regarding tactical asset allocation is correct? A. Statement 1 B. Statement 2 C. Statement 3 Rebecca Mayer is an asset management consultant for institutions and...
-
Given Kovals current portfolio and the tax laws of the country in which he lives, Kovals portfolio would be more tax efficient if he reallocated his taxable account to hold more: A. high-yield bonds....
Study smarter with the SolutionInn App