630 ECON INTLB 334 Homework Assignments
INTERNATIONAL ECONOMICS
DR.HAMMOUDEH
HW#1: ABSOLUTE AND COMPARATIVE ADVANTAGE 1. Suppose there are two countries and two goodsCountry S Grapes Honey 10 labor hrs/unit of output 2 Country F 12 5
a. Which country has an absolute advantage in grapes? In honey? b. Can the countries specialize according to absolute advantage? I f not , can they specialize on the basis of comparative advantage? What are the gains in this case? 2. Suppose the absolute prices of G and H in both countries are: Country S Grapes Honey $20 per unit of output $4 Country F $36 $15
a. Calculate the pretrade relative price of G in terms of H. Relative price of H? b. Which country has a comparative advantage in G? In H? Remark: The above two questions are not related. No information should be taken from one question and used in the other.
ECON 630
INTERNATIONAL ECONOMICS
DR.HAMMOUDEH
HW#2: THE CLASSICAL MODEL:ABSOLUTE AND COMPARITIVE ADVANTAGE
Please do the following exercises from the Text P 76: Ex. 1 Case 1 only P 77: Ex 6 that (assume the country has a comparative advantage in S).
ECON 630
INTERNATIONAL ECONOMICS
DR.HAMMOUDEH
HW#3: TESTING THE CLASSICAL MODEL:
Two countries: Italy and Greece producing olives Italy Output: 120 units Labor : 30 workers Wages: $3 Exports: $100 Greece Output: 60 units Labor: 30 workers Wages: $2 Exports: $50
A real word comparative advantage for Italy over Greece in olives is measured by a ratio of Italian exports of olives to Greek exports that exceeds one. Calculate this ratio and consider it the real world. Determine the comparative advantage according to the classical model. Is the classical model's prediction of comparative advantage for each good consistent with the comparative advantage in the real world given by the above example? Hint: Calculate relative productivity and relative wage.
ECON 630
INTERNATIONAL ECONOMICS
DR.HAMMOUDEH
HW#4: TARIFFS
Please do the following exercises from the Text P 177: Ex. 7 P 179: Ex 17. HW#5: NON TARIFF BARRIERS
Please do the following exercise from the Text P 216: Ex. 9.