Reference no: EM133080177
Answer all question
1. What is the main product category or sector which is the most important one in recent years, as compared to 70 years back? Explain
2. With the use of mathematical equation, explain gravity model.
3. What is the relationship of the following variables with trade? Explain!
a. distance
b. Income
4. Identify and explain 5 determinants of trade, that you know.
5. Is there any empirical evidence to support the prediction of gravity model? Explain
6. Why trade occurs between countries?
7. What is Ricardian Model? What are the assumptions of Ricardian Model?
8. Assuming a world with only two countries (country A and country B), producing only 2 products (rice and coffee). Country A is reported to be efficient in producing both products, where the unit labor requirement to produce a kg of rice is 1 hour of labor, while for 1 pack of coffee (500g) is 2 hours of labor. On the other hand, country B needs 8 hours of labor to produce 1 kg of rice and 2 hours of labor to produce 1 pack of coffee (500g). In this case, in your opinion, country A and B should produce and export what product? Or they should not export? Explain!
9. What is the prediction of Ricardian Model with regard to trade in the real world?
10. Is there any empirical evidence to support the prediction of Ricardian Model? Explain!