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Ch 5 Global Trade [AP &amp; Reg]

# From we have tariffs on 8753 products 70 of our

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Unformatted text preview: ve to give up up only 3 hats. DCC: Rayland DCC: 1B=4H ¼ B= 1 H DCC: Artland 1B=2H ½ B= 1 H Terms of Trade Terms 1B=3H 1/3 B = 1 H (c) If the terms of trade are 5 hats for 1 bicycle, would trade be advantageous for each of the following? (i) Artland Answer to 2. (c) (i): Yes, 5 hats is better than 2 hats they are getting domestically. No, (ii) RaylandAnswer to 2. (c) (ii): No, Rayland is going to export hats so opportunity cost is ¼ bicycle. So 1/5 of a bicycle would not benefit them. is (d) If productivity in Artland triples, which country has the comparative advantage in the production of hats? Answer to 2. (d): 300 bicycles would become 900 and 600 hats would become 1,800, so the Answer DCC would still be 1 bicycle = 2 hats, same as before. Rayland still has a C.A. in hats. Output v . Input Input Rabbit 1 G = 3 B 1/3 G=1B Rabbit Wabbit Rabbit Wabbit 1 G = 2 B 1/2 G=1B Terms of Trade: 1G = 2.5 B Product Market [outputs] Country Guns Butter Rabbit 40 units 120 units Wabbit 20 units 40 units What country has an...
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