4假定A国和B国的劳动禀赋均为400A国生产1个单位的X商品.docVIP

CHAPTER 2 Review Questions 1.Assume that the Home country has a total supply of labor hours of 1000 and the Foreign country has a total supply of labor hours of 1200. Each country can produce two goods: bicycles and skateboards. The unit labor requirements in Home production are 5 hours per bicycle and 2 hours per skateboard. Foreign requirements for both bicycles and skateboards are 3 hours per unit. a. Graph the production possibilities frontiers for the Home and Foreign economies. b. In the absence of trade, what is the relative price of bicycles in terms of skateboards in each country? c. Trade is said to make each country better off by enlarging the range of consumption choices available to residents. Compare the consumption possibilities available to Home and Foreign consumers in the closed economy and open/trading economy cases. Graph the expanded consumption opportunities. The relative price of skateboards in terms of bicycles under free trade is 4/5. 2. Suppose that Home and Foreign have the unit labor requirements shown below. Baseball Bats Tennis Rackets Home aLB 6 aLR 2 Foreign aLB 1 aLR 4 a.In which good does Home have the relative productivity advantage i.e., comparative advantage ? Why? b. What is the opportunity cost of rackets in terms of bats for the Home country? for the Foreign country? c. At world equilibrium with trade, what do you know about the relative price of tennis rackets? d. Assume that a tennis racket trades for a bat on world markets at an equilibrium price of PR/PB 2. Why will each country will specialize? Home will specialize in rackets and Foreign in bats . e. Demonstrate that there will be gains from trade reaped by the Foreign country when it specializes in bat production. 3.Assume that labor is the only factor used in production, and that the costs of producing butter and cloth are given by the table below. Home Foreign Cost in labor-hours to produce: 1 unit of butter 1/8 1 1 unit of cloth 1/4 1/2 a. Expres