澳洲统计学课程论文.docxVIP

Econ 317/417 International Trade and Payments Assessment Question 1 Part la) The formula to calculate the pre-trade price ratios is P) al I , 卩2 a2 Where Pi is the price of wine P2 is the price of cheese is the labour hours used to produce wine a2 is the labour hours used to produce cheese For Australia, pre-trade price ratio is 15/10 = 1.5 For New Zealand, pre-trade price ratio is 10/4 = 2.5 Part lb) Production frontier of Australia Production of Wine, in million bottles Production frontier of New Zealand Production of Wine, in million bottles20/10 = Production of Wine, in million bottles 20/10 = Part lc) The opportunity cost for producing 1 kilo of cheese in New Zealand is 2/5 = 0.4 bottle of wine. The opportunity cost for producing 1 kilo of cheese in Australia is 0.6667 bottle of wine. Therefore, New Zealand has a lower opportunity cost on producing wine and she will focus on producing wine in this case scenario. Australia will focus on producing cheese. From the question we know that the price ratio after trade is 0.5. so from part la) we know that in Australia will produce wine instead of cheese. A total of 30/15 = 2 million bottles of wine can be produced? Similarly, New Zealand will produce 20/4 = 5 million kilograms of cheese and they exchange at the ratio of 0.5. Australia will export wine and New Zealand will export cheese Part Id) After-trade, Australia has 1 million bottles of wine and 2 million kilos of cheese. New Zealand will have 3 million kilos of cheese and 1 million bottles of wine with free trade The frontier after the trade for Australia is shown below The frontier after the trade for New Zealand is shown below Part le) Both countries gain from the trade? The consumption possibilities are larger than the production possibility for both countries, by observing charts in part Id), from the chart, one can see that Australia can only consume within the production frontier of the chart while the consumer frontier becomes the red line as indicated in