B1) Assume that Russia and the US have 400 million workers each. Each worker, Russian or...

 

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B1) Assume that Russia and the US have 400 million workers each. Each worker, Russian or American, can produce 16 mobile phones per year. A Russian worker can produce 40 tons of millet per year, while an American worker can produce 20 tons of millet per year. a) [3 marks] Which country has an absolute advantage in producing mobile phones? In producing millet? Give a brief explanation of your answers. b) [3 marks] Which country has a comparative advantage in producing mobile phones? In producing millet? Give a brief explanation of your answers. c) [2 marks] Assume that Russia and the US open up for trade. What is the price range (i.e., what are the lowest and highest possible prices) at which mobile phones could be traded (in terms of millet given up)? What is the price range (i.e., what are the lowest and highest possible prices) at which millet could be traded (in terms of mobile phones given up)? d) [2 marks] Assume that the Russian government puts a price ceiling on millet at 0.9, which affects both domestically produced and imported millet. Is this price ceiling binding? Are millet imports from the US negatively affected? Are domestic millet producers affected? B1) Assume that Russia and the US have 400 million workers each. Each worker, Russian or American, can produce 16 mobile phones per year. A Russian worker can produce 40 tons of millet per year, while an American worker can produce 20 tons of millet per year. a) [3 marks] Which country has an absolute advantage in producing mobile phones? In producing millet? Give a brief explanation of your answers. b) [3 marks] Which country has a comparative advantage in producing mobile phones? In producing millet? Give a brief explanation of your answers. c) [2 marks] Assume that Russia and the US open up for trade. What is the price range (i.e., what are the lowest and highest possible prices) at which mobile phones could be traded (in terms of millet given up)? What is the price range (i.e., what are the lowest and highest possible prices) at which millet could be traded (in terms of mobile phones given up)? d) [2 marks] Assume that the Russian government puts a price ceiling on millet at 0.9, which affects both domestically produced and imported millet. Is this price ceiling binding? Are millet imports from the US negatively affected? Are domestic millet producers affected?

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a Both Russia and the US have an absolute advantage in producing mobile phones This is because each worker can produce 16 mobile phones per year Absolute advantage refers to a countrys ability to prod... View the full answer