Exam 20: World Trade Equilibrium

Scenario 20.1 Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. -Refer to Scenario 20.1. Calculate the opportunity cost of producing sugar in Brazil.

The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5 -According to Table 20.5, the equilibrium quantity of computers traded in the world market is:

The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5 -Dutch Disease is associated with a dramatic decline in the demand for a primary commodity produced by a country.

The figure given below shows the import demand and export supply curves of corn in the U.S. and Mexico.Figure 20.2 -According to Figure 20.2, the international equilibrium price of corn is:

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day.Table 20.2 -According to Table 20.2, what is the opportunity cost of 1 computer in the Philippines?

The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5 -The comparative advantage in a specific good can shift over time from one country to another, as the other countries can produce it at a cheaper cost after imitating the technology.

Scenario 20.2 Suppose labor productivity differences are the only determinants of comparative advantage, and both Egypt and Ghana produce only corn and cocoa. In Egypt, 10 bushels of corn or 15 pounds of cocoa can be produced in a day. In Ghana, one day of labor can be used to produce either 2 bushels of corn or 8 pounds of cocoa. -Refer to Scenario 20.2. Egypt will be willing to trade corn for cocoa if in the international market 1 bushel of corn can be exchanged for:

The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5 -No country can have an absolute advantage in the production of more than one good.

The table below shows units of wheat and cloth produced by each worker per day in both the countries.Table 20.1 -The difference between absolute and comparative advantage is that:

The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.Table 20.5 -According to the Heckscher-Ohlin model:

The table below shows units of wheat and cloth produced by each worker per day in both the countries.Table 20.1 -Refer to Table 20.1. Which of the following statements is true?

The table below shows units of wheat and cloth produced by each worker per day in both the countries.Table 20.1 -Which of the following can be inferred from the information provided in Table 20.1?