Problem 2. A substantial portion of international trade happens between countries with similar char- acteristics and even within the same industry. a) Define intra-industry trade. Do the predictions from the Heckscher-Ohlin model help in explaining intra-industry trade? b) What are the main advantages of intra-industry trade and how may consumers benefit from it? c) Consider the case of a country that simultaneously exports and imports cars. It exports $1.5 billion dollars while importing $2 billion dollars. Compute the Grubel-Lloyd index for the car industry in this country. Briefly comment on it.
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- a) Suppose the two countries engage in international trade, and that the international relativeprice of good (T) is 3 tons of good (D). Can there be mutually beneficial international tradebetween the two countries? If so, which are the patterns of comparative advantage, ofproduction and consumption, of exports and imports between the two countries? What arethe gains from trade for each country? b)35. What are the conditions necessary for international trade to be mutually beneficial? a) absence of fraud and coercion b) reciprocal trade, meaning imports must also generate exports c) balance of trade, meaning the value of imports must equal the value of exports d) the trading parties must have different production possibilities frontiers e) trading parties must be able to calculate their costs and benefits f) each country must be exporting the good in which it has an absolute advantage g) each country must specialize in the good of which it is the more efficient producer h) the trade does not cause some jobs to move to the other country15. Which one of the following statements about international trade is FALSE? a) when consumption externality is ignorant, importing will always be environmentally beneficial b) Import happens only when the global price for a goods is smaller than the domestic price c) Exports of carbon emissions happens when a country importing goods from other countries d) Multi-national companies' production decisions should be blamed for creating pollution havens in less-developed countries e) The process and production methods used in trade agreements should be blamed for creating pollution havens. 16. Which one of the following statements about trade and the environment is true? a) Inclusion of externality impacts increases the net gains from trade b) Inclusion of externality impacts implies that international trade decreases overall social welfare c) Free trade always has a damaging effect on the environment d) Free trade always has a beneficial effect on the environment e) Inclusion of…
- Question Completion Status: 25 Sd 20 15 p* a bc IP 10 Dd 0 3 6. 12 15 18 21 24 18. If the free trade price is IP and this country imposes a trade tariff of $3, the loss to consumers as a result of the imposition of the tariff is represented by O (a) area (a) in this graph O (b) area (b) in this graph (c) areas (c) + d) (d) areas (b) + (c) + (d) (e) areas (a) + (b) + (c) + (d) 9.6 Consider two countries Home and Partner trading industry goods. Partner’s supply curve can be represented as follows: XSP=P-1 Home’s import demand for industry goods is given by: MD=10-P The rest of the world is represented by the following supply of industry goods. XSRoW=P-1 a) Derive and graph Home’s import supply curve and find the equilibrium price under free trade. Quantify the amount of goods exported and imported. b) Assume that Home imposes a MFN-tariff of 1 on all industry imports. Find the new equilibrium and quantify the domestic price, border prices and quantities exported and imported. c) What happens if Home removes the tariff for imports from Partner but not from the rest of the world. Find the new equilibrium and quantify domestic price, border prices and quantities exported and imported.(f) Suppose that the equilibrium price of good x (keeping the price of good y as 1) is equal to 1. Determine the optimal production and consumption both at Home and Foreign when they open up to trade. Depict this in graph.
- help explain this pls. International trade is the subject of much debate. Many economist favor encouraging international trade, citing the benefits gained by trade. However, there are economic arguments for limiting international trade with protectionism. Classify the given statements into the appropriate category. Look at image for answer bank. Arguments for promoting international trade Arguments for limiting international trade with protectionismAssume that Sardi and Tinaka can switch between producing corn and producing pork at a constant rate. Quantity that each make Bushel of Corn Pound of Pork Sardi 20 Tinaka 15 12 10 Refer to Table 3-1. Sardi has a comparative advantage in the production of corn and Tinaka has a comparative advantage in the production of pork. pork and Tinaka has a comparative advantage in the production of corn. both goods and Tinaka has a comparative advantage in the production of neither good. neither good and Tinaka has a comparative advantage in the production of both goods.International trade: If Germany (which is a large country) imposes an import tariff on textile imports, we can conclude that: (a)The world price of textile rises, and Germany imports less. (b)The world price of textile stays constant, and Germany imports less. (c)The world price of textile falls, and Germany imports less. (d)The world price of textile stays constant, and Germany imports the same as before. Explain your answer clearly. Limit your explanation to 200 words.
- The graphs below show domestic supply and demand curves for a good in two countries, with prices measured in the same currency. If these are the only two countries in the world and if they open to free international trade, O. Demanders of the good in Country A will benefit from trade. O. Suppliers of the good in Country A will benefit from trade. O. The welfare of Country A as a whole will fall. O. The quantity of the good demanded in Country B will become larger. O. The price of the good in both countries will be the one labeled PB.4. Effects of a regional trading arrangement Consider a hypothetical world consisting of only three countries: Liechtenstein, Canada, and France. Each country produces grain. Liechtenstein is a small economy compared to Canada and France and thus cannot influence foreign prices. On the following graph, the supply and demand schedules of Liechtenstein are shown as Such and DLch- Foreign supply schedules of grain are perfectly elastic: Canada is a more efficient supplier of grain than France because its supply price is $1.00 per bushel (Scan), whereas France's supply price is $2.00 per bushel (Sp). ? 10.00 SL 9.00 8.00 7.00 6.00 5.00 4.00 3.00 A 2.00 Scan 1.00 6 12 18 24 30 48 54 60 Calculate the quantity of bushels Liechtenstein imports when the three nations engage in free trade. Enter this value in the first row of the following table. Also indicate which country Liechtenstein imports from. Imports Scenario (Thousands of bushels) Imports from... Free trade With tariff With customs…Suppose you are an economist advising the Canadian government as to whether to erect trade barriers for the protection of Canada's textile industry. You are likely to study the gains to be realized in this industry and weigh those against Select one: A. the lower factor prices that occur in competing domestic industries. B. the cost in terms of lower national income of Canada's trading partners. C. the effect on factor incomes of Canada's trading partners. D. the cost in terms of higher prices to Canadian consumers.