Quiz 1 Answers

Quiz 1 Answers - Extra Problems (with Answer) to Prepare...

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FI 4040 — Spring 2009 Reza S. Mahani Georgia State University January 26, 2009 Question 1 Given the resources available to them, countries A and B can produce the following combinations of steel and corn. Country A Country B steel (tons) corn(bushels) steel (tons) corn(bushels) 36 0 54 0 30 3 45 9 24 6 36 18 18 9 27 27 12 12 18 36 6 15 9 45 0 18 0 54 1. What is the production price of a bushel of corn in terms of a ton of steel, in Country A? in Country B? Country A: 2 ton/bushel, Country B: 1 ton/bushel 2. Do you expect trade to take place between countries A and B? Why? Yes, based on production prices Country B has comparative advantage in corn production and Country A in steel production. 3. Which country will export steel? Which will export corn? Explain. Country A produces steel and export some to Country B; Country B pro- duces corn and export some to Country A. Problem 2 On August 8, 2000, Zimbabwe changed the exchange rate from 38 Z - $ U.S. - $ to 50 Z - $ U.S. - $ . 1. What was the original U.S. dollar value of the Zim dollar? What is the new U.S. dollar value of the Zim dollar? The U.S. dollar value of the Zim dollar
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Quiz 1 Answers - Extra Problems (with Answer) to Prepare...

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