Question

In: Economics

1. In the first class we saw that a number of foreign aerospace firms (led by...

1. In the first class we saw that a number of foreign aerospace firms (led by Bombardier of Canada) are producing and exporting aerospace products, including small airplanes and helicopters, from the state of Querétaro in Mexico.

a. Why is this surprising? Would traditional theories of trade such as absolute or comparative advantage lead you to expect Mexico to be exporting aerospace products such as airplanes or helicopters? Why or why not?

b. What factors or causes could explain why this is happening? Name at least three (3) explanatory factors or reasons.

Solutions

Expert Solution

Answer A. This is surprising because for mexico to produce such high-end technological gadgets is not expected considering their economy and their human resource in rference to knowledge and innovation.

Considering Ttaditional theories of trade such as comparative and absolute advantage it is possible that mexico can produce and export aerospace proucts. Since there are two important point in this.

Firstly we consider they are efficient in proucing aerospace products. So going by absolute trade theory when they are efficient at producing qulity products, it is imminent that they produe more of it to an extent that they export the products.

Secondly when we consider the second factor, the comparative trade theory it says countries should import if the country is more efficient in the prouction of the product from the country thay are buying from. This is because efficient utiisaiton of resources leads to more productivity and defiitely there is cost involved. Besides the cost of producin the same products at home is comparatively higheer as such it is preferred to imporrt those products from Country like mexico.

Answer B. Three important reasons on why this is happening:

1) Cost - Cost is definitey one factor owing to which we see that Mexico is preferred detination to impport aerospace products. The cost of producing one unit of the product would be much lessser in mexico than in the home country.

2) Improves the bilateral trade relationship between countries.

3) Import from aerospace products from Mexico, gives an opportunity to make optimum utilization of available resources in researchnand development in creating more innovative and disrupting technologies.


Related Solutions

During the first lecture we saw a number of optical illusions. What key aspect of sensory...
During the first lecture we saw a number of optical illusions. What key aspect of sensory processing did we learn from these examples? a. That humans have difficulty perceiving parallel lines. b. That perception is objective: the same visual scene will look identical to all observers. c. That our perception is heavily influenced by top-down processes. d. That sensory processing is unambiguous: our senses always precisely represent our environment.
This week we learned about the Foreign Corrupt Practices Act (FCPA). In that learning we saw...
This week we learned about the Foreign Corrupt Practices Act (FCPA). In that learning we saw that a key to reducing the penalty is through keeping books and records that are clean and transparent. Consider this case: A USA public company doing business in Freedonia (a made up name from another Marx Brothers movie!) is compelled to bribe local officials in order to be the first to receive a business license for a certain type of industry there. The competition...
We saw in class different sorting algorithms, and we generally assumed the input to be sorted...
We saw in class different sorting algorithms, and we generally assumed the input to be sorted wasj an array. Here, the provided input is an unordered linked list of n elements with integer values. We are interested in sorting this list in increasing order (smallest first), in O(n log n) worst case time, while using constant space (also called in-place sorting). Note that recursion requires additional space on the stack, so should EC330 Applied Algorithms and Data Structures for Engineers,...
Recall the dynamic programming algorithm we saw in class for solving the 0/1 knapsack problem for...
Recall the dynamic programming algorithm we saw in class for solving the 0/1 knapsack problem for n objects with a knapsack capacity of K. In particular, we characterized our recurrence OPT(j, W) to be following quantity: OPT(j, W) := The maximum profit that can be obtained when selecting from objects 1, 2, . . . , j with a knapsack capacity of W , where (after filling in our dynamic programming table), we return the value stored at OPT(n, K)...
We saw in class that each LP can be transformed into an equivalent LP in any...
We saw in class that each LP can be transformed into an equivalent LP in any of the following two forms below: (1) maxcTx: Ax=b, x≥0 (2) maxcTx: Ax≤b. Can we always transform any LP in an LP of the form Prove your answer correct. maxcTx: Ax=b?
Que. As we saw in the class lecture one of the most controversial ideas of Marx...
Que. As we saw in the class lecture one of the most controversial ideas of Marx was his quote: “Religion is the opium of the people”. Many people now discuss the decline of the role of religion in people’s lives and wonder if Marx’s concept may be outdated. Here is your chance to update Marx’s ideas. For this question, you are to substitute the word “media” for the word “religion” in the above quotation. In other words, the quote you...
In lecture we saw the Cournot competition model for two firms with the same cost function....
In lecture we saw the Cournot competition model for two firms with the same cost function. Now, we are going to consider asymmetric cost functions. Assume that demand for a good is given by p=a−bQd (Qd is quantity demanded), and that there are 2 firms competing in quantities. Both have no fixed costs and a constant marginal cost. Firm 1 has a marginal cost c1, and firm 2 has a marginal cost c2. We have that a>c1>c2. Find the reaction...
1. We learned about each of the following experimental stories in class, which together led to...
1. We learned about each of the following experimental stories in class, which together led to the discovery of cell cycle regulation. For each one, list the model organism used, the major experimental steps that were taken, and the major result that was obtained (the significant piece of cell cycle regulation that was uncovered by the experiment) a. Identification of cyclin b. Identification of cell division cycle (CDC) mutants c. Identification of maturation promoting factor (MPF) 2. How did the...
In class, we saw that countries with high levels of schooling attainment generally have higher income...
In class, we saw that countries with high levels of schooling attainment generally have higher income and growth rates than countries with low levels of schooling attainment. Based only on the model of individual schooling decisions discussed in class, what are two characteristics which you would expect to be systematically different between countries with high vs. low schooling attainment?
In class, we saw that countries with high levels of schooling attainment generally have higher income...
In class, we saw that countries with high levels of schooling attainment generally have higher income and growth rates than countries with low levels of schooling attainment. Based only on the model of individual schooling decisions discussed in class, what are two characteristics which you would expect to be systematically different between countries with high vs. low schooling attainment?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT