Issue For centuries the people of Newland have supplied most of their needs by raising sheep...

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Issue For centuries the people of Newland have supplied most of their needs by raising sheep and cattle. However, their new economic chairperson, Ms. Bankstreet, wants to expand Newland's economy through trade. Read the investigations and answer the questions on a separate sheet of paper. Investigation 1 Sure that Newlanders can surpass neighboring Westlanders at producing wool and cheese, Ms. Bankstreet instructs Newlanders to alternate producing the two products on a monthly basis to determine which to sell to Westland and other regions. The first year's production reports show that Newlanders can produce 1,000 pounds of cheese or 400 pounds of wool monthly. Comparable Westland figures indicate monthly production of 300 pounds of cheese or 1,000 pounds of wool. The next year, Ms. Bankstreet directs Newland producers to stop producing wool and to concentrate on making cheese. 1. What absolute advantages does Newland have over Westland? 2. What is the opportunity cost of Ms. Bankstreet's decision for the second year? 3. Why is Ms. Bankstreet's decision wise? Investigation 2 Newland's cheese exports are so successful that before long it is selling much more to Westland than it is buying. The new income encourages a number of entrepreneurs to try their hand at manufacturing leather shoes. Newlanders have been buying shoes from neighboring Eastland, so Ms. Bankstreet is pleased that they may be able to buy their shoes from home producers. To help the entrepreneurs, Ms. Bankstreet first severely limits shoe imports from Eastland, but Newland's growing cheese exports to Eastland suffer. She soon reconsiders and decides just to tax shoes imported from Eastland. Newlanders complain about higher- priced shoes, so she merely requires Eastlanders to obtain a license to sell their shoes in Newland. 4. With which of its neighbors does Newland have a trade surplus? 5. For what industry does Ms. Bankstreet practice protectionism? 6. a.) What trade quota does Ms. Bankstreet set up? b.) What tariff? c.) What formal trade barrier? Issue For centuries the people of Newland have supplied most of their needs by raising sheep and cattle. However, their new economic chairperson, Ms. Bankstreet, wants to expand Newland's economy through trade. Read the investigations and answer the questions on a separate sheet of paper. Investigation 1 Sure that Newlanders can surpass neighboring Westlanders at producing wool and cheese, Ms. Bankstreet instructs Newlanders to alternate producing the two products on a monthly basis to determine which to sell to Westland and other regions. The first year's production reports show that Newlanders can produce 1,000 pounds of cheese or 400 pounds of wool monthly. Comparable Westland figures indicate monthly production of 300 pounds of cheese or 1,000 pounds of wool. The next year, Ms. Bankstreet directs Newland producers to stop producing wool and to concentrate on making cheese. 1. What absolute advantages does Newland have over Westland? 2. What is the opportunity cost of Ms. Bankstreet's decision for the second year? 3. Why is Ms. Bankstreet's decision wise? Investigation 2 Newland's cheese exports are so successful that before long it is selling much more to Westland than it is buying. The new income encourages a number of entrepreneurs to try their hand at manufacturing leather shoes. Newlanders have been buying shoes from neighboring Eastland, so Ms. Bankstreet is pleased that they may be able to buy their shoes from home producers. To help the entrepreneurs, Ms. Bankstreet first severely limits shoe imports from Eastland, but Newland's growing cheese exports to Eastland suffer. She soon reconsiders and decides just to tax shoes imported from Eastland. Newlanders complain about higher- priced shoes, so she merely requires Eastlanders to obtain a license to sell their shoes in Newland. 4. With which of its neighbors does Newland have a trade surplus? 5. For what industry does Ms. Bankstreet practice protectionism? 6. a.) What trade quota does Ms. Bankstreet set up? b.) What tariff? c.) What formal trade barrier?

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Answers to your Newland Trade Scenario Questions Investigation 1 Absolute Advantages Based on the information provided Newland has an absolute advanta... View the full answer