Ricardian Trade Model

 

The figures in the following table give the alternate combinations of steel and autos that Japan and South Korea can produce if they fully use their resources at their disposal with the best technology available to them. Answer the questions that follow based on these figures. You can submit your answers via a link to Google document.


                 Japan             South Korea

Steel     500                  900

Autos   600                  400

  1. Sketch the Production possibilities curves for Japan and South Korea separately. Locate steel on the vertical axis and autos on the horizontal axis of each graph.
  2. What is the opportunity cost of steel in Japan? What is the opportunity cost of steel in Korea? Based on your results, which country has comparative advantage in steel production?
  3. Based on your answer in Question #2, should the countries specialize in an area of production? If so, which country should specialize in steel production? In autos? Explain your answer.
  4. Suppose, in Autarky, Japan chooses to consume 300 units of steel and 240 units of autos. Label this point on the country’s PPC.
  5. Suppose, in Autarky, South Korea chooses to consume 450 units of steel and 200 units of autos. Label this combination on the country’s PPC.
  6. If these countries now want to develop trade relation, what would be the trade price of steel in the world market?
  7. Suppose the negotiated trade price is: 1 unit of steel for 1 Auto. Would it be a valid price?
  8. Using the trade price, draw the terms of trade line in each of the PPC graph you have drawn before. Write the slope of the TT line.
  9. If South Korea still wants to consume 450 units of steel, how many autos can it get through exchange when trade begins? Is it a better position than autarkic position?
  10. If Japan still wants to consume 240 autos, how much of steel it can get in exchange when trade begins? Would it be better than the autarkic position?

Answers

Related Questions

Final Paper Preparation Topic: Abortion- Please r...

Hello and thank you for assisting me with this paper. This is a rough draft for a final paper due in three weeks. If you assist me with this rough dra...

Scholarly Sources & Bibliography Analysis...

Prepare: In order to prepare for this assignment, view the following tutorial from the Ashford University Library: Scholarly and Popular SourcesReflec...

Philosophy of Education...

Prepare: Read the article A Portrait of the Teacher as Friend and Artist: The Example of Jean-Jacques Rousseau by Hunter McEwan (2011) from the Ashfor...

Business Model and Strategic Plan Part III: Balanc...

Identify key trends, assumptions, and risks in the context of your final business model. Develop the strategic objectives for your new division of...

Introduction, Thesis Statement, and Annotated Bibl...

Prepare: To help with the preparation of your annotated bibliography, review the following tutorials and resources from the Ashford Writing Center:Int...

No later then 23 ontime please thank you.....

 No less then 8 to 10 Pages paper   This course focuses on Toni Morrison’s novels and the problem of theodicy. Theodicy¾a combination of two Gr...

OSH Q's X4...

1) In your own words, define risk. What are the four functions of risk? How can these four functions be used to make risk decisions? List the factors...

Write a 1,050-word report using your company or on...

Write a 1,050-word report using your company or one with which you are familiar (if you prefer, your facilitator can assign one to you). Answer the fo...

Government homework...

here are the 4 questions that i need to be solved, the first one to get all 4 will be paid.  1.      Discuss the arguments for tuition deregula...

Outline...

For this assignment, you will choose one of the main concepts discussed in this course. You will be creating and submitting an outline in Unit V, comp...

mgmt 315...

This week we are focusing on global communication.  I have listed several journal articles to give you some background on this topic.  I would like...

English body paragraph in an hr...

I am really in a hurry about this essay just need one page and half body paragraph about this esssy in ONE hour let me know if you can help me. Dont d...

week 11 discuss...

"HRM, HRD, and Your Learning" Please respond to the following: Define the basic premises of both HR management and HR development so that you can exp...

Business Decision Making Project Part 3...

Prepare an 11- to 15-slide Microsoft® PowerPoint® presentation for the senior management team based on the business problem or opportunity you de...

4 Accounting Problems...

a.       PROBLEM 1Millar Company has the following cost records for May 2016   Indirect factory labor$ 10,000Advertising Expense$   8,000D...

Thesis Statement and Informal Outline Worksheet...

provide your thesis statement and begin creating the informal outline for your Continuing Academic Success essay assignment. Include the following in...

Interahip theory paper...

Add on to assignment weekly journal, school vs real world and analysis. BS I don't care and fix grammar errors. Rubic is addedI needed by this Fri...

Market Structures (Microeconomics)...

In an eight- to 10-page paper, describe each market structures (perfect competition, monopolistic competition, oligopoly, monopoly), provide a real-li...

2 Part Assignment...

PART 1: Scenario:  You have been hired as a consultant by the CEO of a medium-sized business with a limited budget to help address concerns that he...

GE1...

With everything discussed with this course, first watch How we can make the world a better place by 2030. Then, offer your considerations as to whethe...

FSA2...

At this point you have examined three years of financial statements for your firm and produced a proforma statement. You have also determined their su...

FSA1...

Review and reflect on the knowledge you have gained from this course. Based on your review and reflection, write at least 3 paragraphs on at least 1 o...

Need Complete ....

Answers must be typed, spell-checked, grammar checked, and double spaced.Outline (50 points)You have just entered a public speaking contest and you we...

HOMEWORK FOR KIM WOODS ONLY...

Due December 14Careers in FinanceFinance is an exciting field in need of intelligent, skilled people. The job opportunities range from corporate finan...

If you didn't find the right answer

Ask Your Questions, We'll notify you once someone answers it