Question

In: Finance

6. Suppose that the following information represents the complete trade data for each country. Exports ($)...

6. Suppose that the following information represents the complete trade data for each country.

Exports ($)

Imports ($)

Country A

Good X

Good Y

Good Z

8,000

12,000

10,000

4,000

5,000

0

Country B

Good R

Good S

Good T

0

1,900

1,600

7,000

9,000

3,000

Country C

Good M

Good N

Good O

8,000

5,000

5,400

3,400

2,500

2,800

(a) Calculate the intra-industry trade index for each commodity category in each country.

(b) Calculate the intra-industry trade index for total trade in each country.

(c) Use trade theory to explain the usefulness of these indices in determining each country’s trade patterns.

Note: You may use either the Balassa index or the Grubel-Lloyd index for your calculations.

Expert Solution

jeff jeffy answered 3 months ago

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