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international economics 5th

Questions and Answers of International Economics 5th

What is paradoxical about the results of Leontief’s test of the Heckscher–Ohlin model?
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
Suppose two countries, Greece and Australia, produce wine and wheat using labor and capital as factors of production. Suppose Greece is capital-abundant and wheat production is labor-intensive. For
Consider two countries, Home and Foreign, engaging in free trade with one another. Each country uses two factors, capital and labor, to produce two goods, trains and hats. Assuming that Home exports
In this chapter, we learned that China is abundant in less-skilled labor. Over time, it has changed from being scarce in physical capital to being abundant in physical capital, and it has also
Suppose Ireland and Canada produce two goods, Y and X. Assume that good Y is labor-intensive and good X is capital-intensive.a. Given the above PPFs, which country is relatively labor-abundant?
Belgium is relatively well endowed with skilled workers compared with China, which is relatively well endowed with unskilled workers. Assume that the production of pharmaceutical products intensively
Compare the basis for trade between the Ricardian model and the Heckscher–Ohlin model.a. List the main assumptions of each model.b. How do the assumptions lead to differences in the pattern of
Consider two countries, Vietnam and China, producing two goods, textiles and televisions. Suppose that textiles are relatively labor-intensive. Vietnam has 20 units of capital and 16 units of labor,
Suppose two countries, France and Germany, use only capital and labor for production. France has 2,050 units of capital and 916 units of labor, and Germany has 816 units of capital and 270 units of
Discovering Data. In this question, you will be asked to use European data to find the latest figures on refugees and asylum cases granted. The source of the data is Eurostat, at:
Suppose that computers use 4 units of capital for each worker, so that , whereas shoes use 0.2 units of capital for each worker, so that . There are 200 workers and 200 units of capital in the
Obtain information pertaining to the U.S. direct investment position abroad on a historical-cost basis from the Bureau of Economic Analysis.:
In which industries is the U.S. investment abroad the largest for 2009—2014? In what industries are foreign investments in the United States most concentrated?
According to Table 5-3, for some countries remittances account for a larger source of income than foreign aid. Should these countries have policies to encourage emigration? Explain. Part A:
Assume that Mexico receives an inflow of FDI. Suppose two factors (labor and capital) are used in the production in two industries (food and televisions). Further assume that televisions are
Why might labor unions support limitations on the outflow of FDI?
The following table shows the flow of FDI for select countries between 1985 and 2008. Over this period, the inflow of FDI to China increased substantially. What is the impact of this flow of capital
Assume a firm has the following costs:Fixed costs: $100Marginal costs: $50/unita. Fill in the missing information on the following chart:b. At what level of output does the firm
Consider a long-run model for a country producing two products (digital cameras and baskets) using two factors (capital and labor).a. Which good would you expect to be capital-intensive? Which
Suppose a country has two specific factors, land and capital. Land is an input in the production of corn. Capital is used only in the production of rockets. A third factor, labor, is mobile between
How does increasing returns to scale lead to gains from trade under monopolistic competition?
Portland and Aleland are two identical countries. Beer manufacturers in each country compete under monopolistic competition.a. Suppose the two countries engage in trade. Determine the impact of
Explain how increasing returns to scale in production can be a basis for trade.
What had Canada expected to gain from forming the CUSFTA with the United States?
Refer to the gravity equation.a. Why is trade greater between two large trading partners?b. How does distance between trading partners influence the amount of trade?
In the monopolistic competition model, would you expect prices to be higher or lower as the number of firms increases? Briefly explain why.
The United States, Japan, and China are among the world’s largest producers. To answer the following questions, assume that their markets are monopolistically competitive, and use the gravity
What evidence is there that Canada was better off than before under the Canada–U.S. free trade agreement (CUSFTA) that started in 1989? What evidence is there of adjustment costs under this
In 2005, there were 127 legislations proposed by 40 states to restrict offshoring. The following table defining the proposed legislations derives from the National Foundation for American Policy.
In a graph similar to Figure 7-12, illustrate the no-trade equilibrium, , for the Foreign firm. a. Supposing Foreign engages in international trade, add the world relative price of
How does an increase in the number of product varieties benefit an importing country?
Reproduce part (a) of Problem 2. Then illustrate the gains or losses faced by the firm relative to the initial offshoring equilibrium, assuming a fall in the price of R&D.Data from Problem 2:In a
In what way will the U.S.–Mexico–Canada Agreement (USMCA) benefit labor unions in the United States as compared with the NAFTA agreement?
In the analysis of the gravity equation, explain why trade within a country was found to be greater than trade between countries.
Use the simplified offshoring model with two activities and the information below to answer the following questions:Two countries: Techland and ProdlandTwo activities: assembly, which is
What are the main differences between the offshoring phenomena in manufacturing versus services?
At the opening of this chapter, we referred to the events of May 1995, when the United States considered putting tariffs on imports of luxury cars from Japan. Specifically, on May 16, 1995, U.S.
Suppose that a producer in China is constrained by the MFA to sell a certain number of shirts, regardless of the type of shirt. For a T-shirt selling for $2.00 under free trade, the MFA quota leads
Refer to Problem 2. At what amount would the tariff be considered prohibitive? Explain.Data from problem 2 : Suppose Home is a large country whose supply and demand curves are given in the left
Referring to Problem 5, would the proposed legislation be as restrictive if the services were outsourced to another state (domestic offshoring) rather than across international borders (foreign
Suppose Home is a large country whose supply and demand curves are given in the left panel of the following figurea. Assume that the world price is Pw = $5 . Determine the consumer and producer
How does trade today differ from that in the past?
What provision of U.S. trade law was used by President Trump to apply a tariff on steel and aluminum? What provision of U.S. trade was used to justify the tariffs on goods imported from China? Do
Aoslia is a small country that takes the world price of corn as given. Its domestic supply and demand for corn are given by the following:a. Assume initially that Aoslia does not open to trade.
Refer to Problem 4. Suppose the Aoslian government applies an import quota that limits imports to 12 bushels.a. Determine the quantity demanded, quantity supplied, and new domestic price with
LobbyInc is a firm that specializes in lobbying the government on behalf of special interest groups. Suppose sugar producers recently hired LobbyInc to help them obtain the rights to sugar quota
Suppose the United States is a large importer of Mexican tortillas. Following the implementation of the North American Free Trade Agreement (NAFTA), the U.S. tariff on tortillas decreased from 25% to
At the opening of this chapter, we referred to the events of May 1995, when the United States considered putting tariffs on imports of luxury cars from Japan. Specifically, on May 16, 1995, U.S.
Suppose that a producer in China is constrained by the MFA to sell a certain number of shirts, regardless of the type of shirt. For a T-shirt selling for $2.00 under free trade, the MFA quota leads
Why do many countries, including the United States, continue to use tariffs to limit imports when the theory shows that such restrictions have a potential to impose net loss on the domestic country?
What is the role of the “most-favored-nation” clause in helping to eliminate discriminatory treatment in international commerce?
The government is more concerned about producer surplus than consumer surplus if it levies an import tariff that raises the domestic price. Comment
What is an efficiency loss? Does it only occur when a small country imposes a tariff?
The following figure shows the top 10 countries cited in antidumping cases by the United States from 1980 to 2004. Is there a relationship between the frequency of being cited in an antidumping case
Why is tariff revenue less important as a source of income for the U.S. government relative to some developing countries? What causes the Foreign export supply curve to slope upward?
The following table provides data on antidumping investigations in the United States from 1980 to 2008. Does the information indicate that it is relatively easy to obtain import protection through an
What causes the Foreign export supply curve to slope upward?
Graphically show the effect of a United States‒imposed tariff on world welfare, assuming that the United States is a small country. How does your result differ if the United States is a large
Explain why the removal of an import quota by a small country where there is only one producer leads to a greater gain for consumers than that generated by the use of a quota in a similar country
What is the effect on welfare when a foreign exporter dumps a product in the U.S. market?
Using the following figure, determine the net impact on Home’s welfare when it imposes a tariff of $2 on the Foreign monopolist. Price 11 10 9 6 4 с B 7 10 MR MC MC Foreign exports
Refer to “Application: U.S. Imports of Japanese Automobiles” in answering the following questions:a. Why did the UAW and Ford Motor Company fail to receive protection from foreign
Consider the case of a Foreign monopoly with no Home production, shown in Figure 9-7. Starting from free trade at point A, consider a $5 tariff applied by the Home government.a. If the demand
Suppose the Home firm is considering whether to enter the Foreign market. Assume that the Home firm has the following costs and demand:a. Calculate the firm’s total costs from selling only in
Identify the U.S. government agencies and their roles in determining whether to apply antidumping or countervailing duties on foreign firms.
How is the amount of the antidumping duty determined?
Who may petition for relief from foreign dumping in the United States?
Name the countries that have filed antidumping claims against the United States. You can find this information by going to the website of the U.S. Department of Commerce International Trade
Refer to Problem 11. Examine the Chinese import of Caprolactam from the United States. Go to https://www.trade.gov/foreign-adcvd-or-safeguard-investigation and then click on C for case tables next to
Why is the equilibrium quantity and price the same with a Home monopoly and perfect competition under free trade?
Find online press reports dealing with immigration issues in Europe and in the United States. Summarize the issues being discussed in each case
The quotation from former Federal Reserve chairman Ben Bernanke at the beginning of the chapter is from a speech that he delivered in Jackson Hole, Wyoming, on August 25, 2006, titled “Global
What is the difference between horizontal and vertical FDI?
Provide reasons for the resurgence of trade that led to the second golden age.
Why is the production possibilities frontier a straight line in the Ricardian model?
If you watch the Netflix film American Factory, answer the following questions: a. What is the very first scene of the movie? Did that scene surprise you, and why? Later, are there any
What determines the pattern of international trade between two countries in the Ricardian model?
Using the Ricardian model, explain why American workers receive higher wages in the production of automobiles than do Chinese workers.
Use the information provided in Problem 9, but suppose the number of laborers in the United States is 300, while the number of laborers in Mexico remains the same at 2.Data from in problem 9Refer to
Would your answers to Problem 5 be different if a worker in the United States became more productive and could produce 70 pounds of beef or 140 bushels of wheat per hour?Problem 5: Refer to the
Provide an example of how the mercantilist school of thought continues to exist today.
Suppose there are two countries producing two goods using only labor. Refer to the following table to answer the questions.a. Which country has absolute advantage in the production of shoes? Wine?b.
Summarize your finding in Problem 1 using notational format. Data from Problem 1 : Use the following information to answer the questions below: ARK/R
Figure 3-7 presents wages in the manufacturing and services sectors for the period 1973 to 2018. Is the difference in wages across sectors consistent with either the Ricardian model studied in
Ashland is considering whether to engage in the international trade of rice and furniture. Suppose that the world price of rice is lower than Ashland’s no-trade price, but its no-trade furniture
When labor shifts from agriculture to manufacturing, why does the marginal product of capital increase, while the marginal product of land falls?
Between 2005 and 2007, displaced workers in the service industries were better off relative to those in the manufacturing industries. Comment.
If instead of the situation given in Problem 6, suppose the price of manufacturing were to fall by 20% and the wage declined by 10%. Then would landowners or capital owners be better off? Explain.
What is fair trade?
Assuming that labor is mobile, is it true that wages always must be equal across the sectors in the specific-factors model?
Home, a small, open economy, uses a mobile factor (labor) and two specific factors (drylands and wetlands) to produce two goods, cactus and rice. Drylands are only productive in growing cactus and
Read the article by Grant Aldonas, Robert Lawrence, and Matthew Slaughter, available online at hks.harvard.edu/fs/rlawrence/fsf_adjustment_assistance_plan.pdf. Then answer the following questions.a.

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