International economics question 1, Microeconomics

Assignment Help:
Steel and aluminum production
Steel Canada 500, France 1200
Aluminum Canada 1500, France 800
The maximum amount of steel or aluminum that Canada and France can produce if they fully use all the factors of production at thier disposal with the best technology available to them (hypothetically) is listed above.
Assume that production occurs under constant-cost conditions. On graph paper,draw the production possibilities schedules for Canada and France; locate aluminum on the horizontal axis and steel on the vertical axis of each countries graph. In the absence of trade, assume that Canada produces and consumes 600 tons of aluminum and 300 tons of steel and that France produces and consumes 400 tons of aluminum and 600 tons of steel. Denote these autarky points on each nation''s production possibility schedule.
a. Determine the MRT of steel into aluminum for each nation. According to the principle of comparative advantage, should the two nations specialize? If so, which product should each country produce?Will the extent of specialization be complete or partial? Denote each nation''s specialization point on its production possibilities schedule. Compared to the output of steel and aluminum that occurs in the absence of trade, does specialization yeild increases in output? If so, by how much?
b. Within what limits will the terms of trade lie if specialization and trade occur? Suppose Canada and France agree to a terms-of-trade ratio of 1:1 (1 ton od steel = 1 ton of aluminum). Draw the terms-of-trade line in the diagram of each nation. Assuming that 500 tons of steel are traded for 500 tons of aluminum, are Canadian consumers better off as a result of trade? If so, by how much? How about French consumers?
c. Describe the trade triangles for Canada and France.

Related Discussions:- International economics question 1

Price system, Price System: Demand is the quantity of a commodity that...

Price System: Demand is the quantity of a commodity that consumers are willing and are able to buy at a given price at a given time period when all other things remain the sam

#titleELASTICITTY.., CONSIDER THE DEMAND CUVE Q=100-50P DRAW THE DEMAND CUR...

CONSIDER THE DEMAND CUVE Q=100-50P DRAW THE DEMAND CURVE AND INDICATE WHICH PORTION OF THE CURVE IS ELASTIC ,WHICH PORTION IS INELASTIC AND WHICH PORTION IS UNIT ELASTIC

Supply and demand shifter, What happens to the market for cchicken wings if...

What happens to the market for cchicken wings if the price of beer increases?

Impact of government legislations on business, Impact of government legisla...

Impact of government legislations on business in india Government in India plays a dominant role in the Indian business activity. It directs and regulates the private business and

Arc elasticity of demand, Arc Elasticity of Demand - Arc elasticity cal...

Arc Elasticity of Demand - Arc elasticity calculates elasticity over the range of prices  - The formula of it is: *  Arc Elasticity of Demand: An Example

Demand and supply of education, Normal 0 false false false ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Growth of employment opportunities, GROWTH OF EMPLOYMENT OPPORTUNITIES: ...

GROWTH OF EMPLOYMENT OPPORTUNITIES: Several disquieting features are observed in the Indian labour market over the past two decades particularly during the 1990s. These are di

How multinational companies help developing countries, Evaluate the role of...

Evaluate the role of multinational companies in helping developing countries to achieve economic growth/development. Explanation of growth; enhance in GDP per time period Ex

Equilibrium level of economic output, Provide an economic explanation of wh...

Provide an economic explanation of what you have shown in your diagram above.  Iceland was a small open economy with perfect capital mobility. Consequently, the equilibrium domesti

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd