Question
In: Economics
3. [The Standard Trade Model] There are two goods: cloth (C) and food (F). Assume that...
3. [The Standard Trade Model] There are two goods: cloth (C) and food (F). Assume that PPF is a smooth curve. Graph the relationship among production, consumption and trade on the PPF curve, when the economy exports cloth and imports food.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
[Specific factor model] Assume that there are two goods: cloth (C) and food (F). There are...
[Specific factor model] Assume that there are two goods: cloth
(C) and food (F). There are 3 factors: labor (L), capital (K), and
land (T).
1) What is the slope of the production possibility frontier?
2) Graph the wage rate and the allocation of labor between the
two sectors.
3) Determine the output of each sector using PPF.
4) Graphically show that the change in relative prices leads to
the change in allocation of labor and output combination. And
determine...
[Specific factor model] Assume that there are two goods: cloth (C) and food (F). There are...
[Specific factor model] Assume that there are two goods: cloth
(C) and food (F). There are 3 factors: labor (L), capital (K), and
land (T).
1) What is the slope of the production possibility frontier?
2) Graph the wage rate and the allocation of labor between the
two sectors.
3) Determine the output of each sector using PPF.
4) Graphically show that the change in relative prices leads to
the change in allocation of labor and output combination. And
determine...
[Specific factor model] Assume that there are two goods: cloth (C) and food (F). There are...
[Specific factor model] Assume that there are two goods: cloth
(C) and food (F). There are 3 factors: labor (L), capital (K), and
land (T). ) What is the slope of the production possibility
frontier? 2) Graph the wage rate and the allocation of labor
between the two sectors. 3) Determine the output of each sector
using PPF. 4) Graphically show that the change in relative prices
leads to the change in allocation of labor and output combination.
And determine...
Consider a country that produces two goods cloth (C) and food (F) with two factors of...
Consider a country that produces two goods cloth (C) and food
(F) with two factors of production: land (T) and labor (L). The
technology for cloth and food are as follows.
Qc= Min {1/20 L,T}, Qf= Min {1/5 L,T}, where Qc denotes the
amount of cloth produced and Qf denotes the amount of food
produced. Denote the wage by w and the rent of land by r.
A).Suppose that the economy’s total resources are 600 hours of
labor and 60...
Assume the Heckscher-Ohlin model where there are two goods, autos and cloth.
Assume the Heckscher-Ohlin model where there are two goods, autos and cloth. The home country is capital abundant while the foreign country is labor abundant. Autos are capital intensive while cloth is labor intensive. What effect does trade have on aggregate demand and supply of labor in the home country? a. The aggregate labor demand curve shifts left while the labor supply curve is unchanged b. Both the aggregate labor demand and labor supply curves shift left c. The aggregate labor demand curve...
a) Assume cloth sector C is relatively more labor intensive (relative to food sector F). Show...
a) Assume cloth sector C is relatively more labor intensive
(relative to food sector F). Show that C firms always devote a
higher share of their total cost to labor and F firms always devote
a higher share of their total cost to capital.
b) In as much detail as possible, compare and contrast the
specific factors model with the Ricardian model.
c) Consider the transition from autarky to trade for a country
with a comparative advantage in F. No...
Two countries - home and foreign Two goods - food and cloth Explain the pattern of...
Two countries - home and foreign Two goods - food and cloth
Explain the pattern of trade in the multi-good Ricardian model.
There are two goods: food F and clothing C. MRS is the marginal rate of substitution,...
There are two goods: food F and clothing C. MRS is the marginal
rate of substitution, and RPT is the rate of product
transformation.
a) in Fredonia in autarky, MRS=6F/C and in Sylvania in autarky
MRS*=2F/C. Specify a trade which makes both countries better
off.
b) in Gargantua in autarky RPT=4F/C and in Lilliput in autarky
RPT*=10F/C. Specify a reallocation of production across countries
such that the output of both goods rise.
Andre buys two goods, food f and clothing c , with the utility function U (...
Andre buys two goods, food f and clothing c , with the utility
function U ( f, c ) = f · c + f . His marginal utility of food is M
U f = c + 1 and his marginal utility of clothing is M U c = f . He
has an income of 20. The price of clothing is 4. a. Derive the
equation representing Andre’s demand for food, and draw this demand
curve for prices...
Suppose that Bridget and Erin spend their incomes on two goods, food (F) and clothing (c)....
Suppose that Bridget and Erin spend their incomes on two goods,
food (F) and clothing (c). Bridget’s preferences are represented by
the utility function U(F, C) = 10F C, while Erin’s preferences are
represented by the utility function U(F, C) = 0.20F 2C 2 .
1. With food on the horizontal axis and clothing on the vertical
axis, identify on a graph the set of points that give Bridget the
same level of utility as the bundle (10,5). Do the...
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