Question 7 (Section 8.4) & Analytical Question 1 Please show all work Whai is th
ID: 1101315 • Letter: Q
Question
Question 7 (Section 8.4) & Analytical Question 1
Please show all work
Whai is the comparative advantage of your country? Can the Heckscher-Ohlin model explain it? Although world coffee prices have risen recently, they remain low and volatile. Can coffee producers learn anything from the actions of oil-exporting nations in using OPEC as a cartel to raise oil prices? What can governments do to ease the distributional effects of trade within a country? Figure 8.10 suggests that trade makes wages reflect productivity within a country. Is this fair? Imagine a reunion in 10 years' time with your classmates. Under one scenario, you find that although your income rose 50%, everyone else's income rose 100%. Under another scenario, your income fell by 25%, but everyone else's fell by 50%. Which of these scenarios do you prefer? What does this imply about competitiveness? An emerging market w ishes to develop a presence in a key high-technology industry. It realizes that, at the moment, it could not possibly compete with existing firms, but it believes that if it were sheltered from competition via import restrictions for several years, it could compete. (This is the infant industry argument for trade restrictions.) What are the likely problems with such an approach? Does popular resentment against free trade simply reflect economic illiteracy or more deep-seated political issues? In Country A. it is possible to produce a car with the same resources that would produce 1000 toy cars. In Country B. producing a car uses resources that could produce 3000 toy cars. Show with a diagram how both countries can be better off if the international terms of trade between cars and toy cars is 1 car to 2000 toy cars. Suppose the country that is relatively good at making toy cars is poor and feels that it cannot waste resources on consuming toy cars. Does this affect your analysis? Consider again the two countries in Question 1. Country A has a per capita GDP 10 times that of Country B. The government of Country B decides that concentrating on producing toy cars is harmful because it sees few countries in the rich, developed world that use more resources on building toys than on manufacturing automobiles. It places a 50% tariff on imported automobiles (so that if the world price of an automobile is $10 000. the domestic price will be $15 000). There is no change in world prices as a result of this. What is the impact of the tariff on the structure of domestic production? Is anyone better off? Is anyone worse off? A small industrialized country' initially has no trading links with a large, but closed, centrally planned economy that shares a border. Wages per hour for skilled and unskilled workers are $25 and $12, respectively, in the industrialized economy. The centrally planned economy suddenly undergoes a peaceful revolution and the border with its industrial neighbour is completely opened to trade. In the formerly centrally planned economy, skilled workers get paid $5 an hour and unskilled workers $2 an hour. Productivity in the formerly centrally planned economy is one-fifth that of the industrial country in all sectors and for all workers. What w'ould factor price equalization imply happens to wages in the industrial country? How would the situation show'n in Table 8.9 change if the EU increased its subsidy from $200 to $300m? If you were the CEO of Airbus, how' would you use this subsidy to improve your market position? How might Boeing respond?Explanation / Answer
About opec:
OPEC represents a considerable political and economical force. Two-thirds of the oil reserves in the world belong to its members; likewise, OPEC members are responsible for half of the world's oil exports. The fact that the organization controls the availability of a substance so universally sought after by modern society makes it a force to be reckoned with.
The first display of the power that OPEC could have on the world's politics was in the 1970s. When the Yom Kippur War exploded in the Middle East, the United States assisted Israel in defending itself against the Egyptian and Syrian armies. In what may have been a response to this interference in the war, OPEC instituted an oil embargo that targeted the United States and its European allies. The embargo lasted from 19 October 1973 to 17 March 1974.
The effects of the OPEC oil embargo were widespread. Immediate effects included inflation and economic recession in the United States and other countries targeted by the embargo. Car owners in the United States were restricted to specific days on which they could purchase gasoline: even dates for cars with even-numbered license plates, and odd dates for cars with odd-numbered license plates.
A national law introducing more restrictive speed limits was instituted, as well as a year-round Daylight Savings Time. The oil embargo also drove auto manufacturers to produce smaller and more fuel-efficient vehicles. Even after the embargo ended, oil prices continued to rise, and the United States economy continued to suffer.
Although OPEC is often seen as a villain in the political arena, the organization serves an important purpose. It prevents its members from being taken advantage of by industrialized countries by ensuring that oil-exporting countries are paid a fair price for crude oil. Because oil-exporting countries are dependent on industrialized countries for oil products, OPEC standards prevent industrialized countries from buying crude oil at rock-bottom prices, then turning around and selling oil products back at vastly inflated prices.
http://www.ssireview.org/articles/entry/the_problem_with_fair_trade_coffee
this link gives the answer you are looking for.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.