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Two countries, Haiti and the Dominican Republic, produce fruits and timber. Each island has a labor force of 1200 and the monthly productivity of each worker is as follow Basket of fruit Board feet of timber Haiti 10 5 Dominican Republic 30 10 a. Which county has an absolute advantage in the production of fruit? Timber? b. Which country has a comparative advantage in the production of fruit? Timber? c. Sketch the production possibility frontier ( PPF) of both countries d. Both countries want to produce an equal amount of baskets of fruit and feet of timber. How should they allocate their workers to the two sectors? e. Can specialization and trade move both countries beyond their PPF? Practicum 2 Let us use the Heckscher-Ohlin model to our countries of Leinster and Saxony, which produce and consume bread and telephones. You may assume that the only two factors of production are labor and land. a. If Leinster has 8 million acres of land and 2 million laborers, while Saxony has 2 million acres of land and 400,000 laborers, which country is "labor abundant"? Which country is "land abundant"? Explain. b. If labor accounts for 80 percent of the total cost of producing telephones but only 20 percent of the total cost of producing bread, which country is more likely to export telephones? Which country is more likely to export bread? Why? Practicum 3 The demand and supply curves of the market for DVD at the local (US) market are as follow P = 30 - Qd/2 and P= -1.5 + Qs/4 a. Find the equilibrium price and the equilibrium quantity when there is no international trade b. What are the equilibrium quantities when the nations trade freely at price of $ 15. Explain your answer c. Based on your response on (c) what is the national gain? d. What happens in the short run to the equilibrium market of DVD if the price of DVR (a substitute to DVD) doubles? Does it affect the price of DVD? e. What would happen in the long run to the equilibrium market? Does it affect the price of DVD?
Explain how would you go about resolving the issue if you were the president of a small, poor country.
Explain why might intangible resources such as human capital and intellectual assets be a more likely source of sustainable competitive advantage than tangible resources.
Compute the steady state levels of population. How might we transition between these two steady states and growth during the Malthusian regime?
Assume bread is subsidized in a small Caribbean nation with a high percentage of citizens who live in poverty. The subsidy is paid to suppliers of bread through government in amount of 50 pesos per loaf.
Consider a bank that receives an initial deposit of $1,000 and loans out the maximum from this that it can. This in turn is deposited into a second bank (which may technically be itself, but that doesn't change anything), which then loans out the ..
Explain how does the Concept of Comparative Advantage actually "prove the advantages" of free trade to both countries involved in a transaction.
A competitive firm can sell all of its output for the market price of $5. its short run cost function is TC= 1000 + Q + 0.005Q2. this cost function has marginal cost given by MC= 1 + 0.01Q.
(a) What is market concentration and how can you know whether a market is concentrated or not (b) What are the causes of market concentration (c) Are business mergers good or bad for the economy Explain why
Explain how the US government managed to accumulate a debt of over 14 trillion. To whom does it owe this debt? Is the debt a burden on future generations?
In December, suppose the money supply does increase to $300 billion and there were no changes in resources in the economy. However, the price level did not change from November. What must have velocity been in December to ensure prices did not cha..
Suppose the price of housing increases to 3, but the price of food stays at 10. Rewrite Jane's budget constraint and draw it on a graph. Now suppose the price of housing decreases to 1. Rewrite her budget constraint again.
Explain how has technology impacted the workplace over the last ten years. What impact have these changes had on costs and prices.
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