What is the net welfare gain from trade to the economies of both countries together? (hint: the formula for calculating the area of a triangle is 1/2 times the base times the height) 3 6 9 13.5 33.75 25 2NN P Country 1 25 International market P 20 20 15 s1 225 15 S1 15 Country 2 99 S2 P s2 25 20 25 10 -IP 10 -IP 10 10 -IP 5 5 LO 5 D2 d1EQ d2 0 D1 0 0 3 6 9 1215182124 Q 0 369 1215182124 Q 0 369 1215182124 18. What is the net welfare gain from trade to the economies of both countries together? (hint: the formula for calculating the area of a triangle is 1/2 times the base times the height) ○ 3 ○ 6 ○ 9 O 13.5 33.75

What is the net welfare gain from trade to the economies of both countries together? (hint: the formula for calculating the area of a triangle is 1/2 times the base times the height) 3 6 9 13.5 33.75 25 2NN P Country 1 25 International market P 20 20 15 s1 225 15 S1 15 Country 2 99 S2 P s2 25 20 25 10 -IP 10 -IP 10 10 -IP 5 5 LO 5 D2 d1EQ d2 0 D1 0 0 3 6 9 1215182124 Q 0 369 1215182124 Q 0 369 1215182124 18. What is the net welfare gain from trade to the economies of both countries together? (hint: the formula for calculating the area of a triangle is 1/2 times the base times the height) ○ 3 ○ 6 ○ 9 O 13.5 33.75

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter34: Globalization And Protectionism

Section: Chapter Questions

Problem 39CTQ: From the Work It Out Effects of Trade Barriers, you can see that a tariff raises the price of...

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Trade has income distribution effects. For example, suppose that because of a government-negotiated reduction in trade barriers, trade between Germany and the Czech Republic increases. Germany sells house paint to the Czech Republic. The Czech Republic sells alarm clocks to Germany. Would you expect this pattern of trade to increase or decrease jobs and wages in the paint industry in Germany? The alarm clock industry in Germany? The paint industry in Czech Republic? The alarm clock industry in Czech Republic? What has to happen for there to be no increase in total unemployment in both countries?
You just overheard your friend say the following: Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade. How would you respond?
From the Work It Out Effects of Trade Barriers, you can see that a tariff raises the price of imports. What is interesting is that the price rises by less than the amount of the tariff. Who pays the rest of the tariff amount? Can you show this graphically?
If trade increases world GDP by 1 per year, what is the global impact of this increase over 10 years? How does this increase compare to the annual GDP of a country like Sri Lanka? Discuss. Hint To answer this question, here are steps you may want to consider. Go to the World Development Indicators (online) published by the World Bank. Find the current level of World GDP in constant international dollars. Also, find the GDP of Sri Lanka in constant international dollars. Once you have these two numbers, compute the amount the additional increase in global incomes due to trade and compare that number to Sri Lankas GDP.
16. What is the net welfare gain from trade to the economies of both countries together? (hint: the formula for calculating the area of a triangle is 1/2 times the base times the height) a) 3 b) 6 c) 9 d) 13.5 e) 27
Suppose there are two countries Peru and Japan that produce Food and Fuel. Peru can produce 7,523 units of Food or 17,853 units of Fuel using a labour force of 8000. Japan can produce 5,733 units of Food or 24,156 units of Fuel using a labour force of 5000. (g) If the terms of trade is 2 to 1 in favour of the country with the comparative advantage in food. Determine the combination of the two goods that each country will consume after trade if the country with the comparative advantage in fuel imports 4000 units of food. Label this point B and B* respectively. h) Who gains from trade? Who loses? What is the impact if any on the world? (i) What should the terms of trade be to make trade beneficial for BOTH Japan and Peru? Explain.
Suppose that there are 10,000 hours of labor available in Canada, and that 15 hours of labor are required to produce one unit of cotton, while 5 hours are required to produce one unit of butter. When trade occurs, the world relative price of cotton (in terms of butter) is 2, and Canada exports 800 units of butter. Find out Canada's imports of cotton would be units. Note: If your answer is an integer, please put in an integer. If your answer is a fraction, please simplify it or convert it to a decimal.
For 2022, according to the heritage foundation, Russia's trade freedom score was 69.0 while Ukraine had a trade score of 76.8. Some of the reasons for these scores could be and we would expect as other countries respond to the war with trade sanctions to Russia, Russia's trade freedom score would Because Russia has higher tariffs and more restrictions in trade than Ukraine; decrease Because Ukraine has higher tariffs and more restrictions in trade than Russia; increase O Because Russia has higher tariffs and more restrictions in trade than Ukraine; increase Because Ukraine has higher tariffs and more restrictions in trade than Russia; decrease.
Argentina and Brazil are considering the potential gains of trade. There is only one factor of production: labor. There are only two goods being produced in either economy: coffee and wine. Argentina can employ 10,000 hours of labor per month. Producing 1 lb. of coffee requires 2 hours of labor, and producing 1 bottle of wine requires 4 hours of labor, in Argentina. Similarly, Brazil can employ 10,000 hours of labor per month. Producing 1 lb. of coffee requires 1 hour of labor, and producing 1 bottle of wine requires 5 hours of labor, in Brazil. A). Which country has an absolute advantage in the production of coffee? B). Which country has an absolute advantage in the production of wine? C). Draw the Production Possibilities Frontier for the two countries.
With respect to Table 2.5, indicate in each case the commodity in which each nation has a comparative advantage. Suppose that the US exchanges 4W for 4C with the UK. How much does the US gain in terms of cloth? How much does the UK gain in terms of cloth? What is the range for mutually beneficial trade?
Graphically illustrate and discuss the potential gains from trade for a country with internal economies of scale in the production of good Y.
“The gravity model of international trade is able to predict trade flows between two countries based on two principal factors.” Describe the gravity model – specify the variables, use an example of Canada and the USA, or Mexico and the USA – both situations where the gravity model has been found to be accurate.