Nоte: Sаme infоrmаtiоn for questions 1-7, except where noted. For questions 1-7, use аny information only after it is given. At a certain point you are told which good is capital-intensive, don’t use that information to answer any questions that come before. The two figures show the Production Possibilities Frontier for two countries, Home and Foreign. Also shown for each country is the indifference curve that is tangent to its PPF. There are two factors: capital and labor. There are two goods, Movies and Books. The Foreign country has comparative advantage in which good(s)?
Infоrmаtiоn fоr questions 17-18 A simple economy only produces Wheаt. There аre two periods: Current and Future. Therefore, there are two kinds of Wheat: Current Wheat, and Future Wheat. There are two countries: Home and Foreign. HOME’s PPF is shown in the figure. Home’s consumption choice is also shown. Also shown is Home’s choice on its PPF: that is, the Home country produces, invests, and consumes, in both periods, in a way that is consistent with the “PPF Choice” point that is shown on the figure. (Recall that the meaning of this point was explained in class.) When Home replants the wheat as given by the previous question, how much wheat production will it have in the Future period? Enter a whole number only. Enter 0 if the answer cannot be obtained with the information given. Only exact answer accepted.
Infоrmаtiоn fоr questions 1-11 Note: for this problem, use аny informаtion only after it is given (the most important information is underlined). For example, in the beginning of the problem, the country of Leisureland is in autarky. Do not use any information given later, about the country when it is trading. The figure shows the Production Possibilities Frontier for Leisureland. There are two other countries in the world: Vacationland, which will trade with Leisureland, but only in some future questions (see below); and Workland, which never trades with anyone. To begin, Leisureland is in autarky, its autarky price of movies is $3, and its autarky price of books is $3. Which of the following points, all of which are on the Production Possibilities Frontier, is closest to Leisureland’s consumption point in autarky? (Hint: the question does not ask for the exact point, just the one that is closest. Carefully consider each of the points listed.)
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Infоrmаtiоn fоr questions 17-18 A simple economy only produces Wheаt. There аre two periods: Current and Future. Therefore, there are two kinds of Wheat: Current Wheat, and Future Wheat. There are two countries: Home and Foreign. HOME’s PPF is shown in the figure. Home’s consumption choice is also shown. Also shown is Home’s choice on its PPF: that is, the Home country produces, invests, and consumes, in both periods, in a way that is consistent with the “PPF Choice” point that is shown on the figure. (Recall that the meaning of this point was explained in class.) Remember that the Home country’s TOTAL wheat production in the Current period is 300, as explained in class. The Home country will reserve a certain amount of that total to invest for the Future period. How much of the total 300 did Home reserve for investment? That is, how much wheat did Home reserve as seed to plant? Enter a whole number only. Enter 0 if the answer cannot be obtained with the information given. Only exact answer accepted.
Infоrmаtiоn fоr questions 19-25 The following grаph depicts the supply аnd demand curves for sugar in the US. The world price of sugar under free trade is PW. If the US imposes either a tariff or a quota, the price of sugar in the US goes up to P′, while the world price goes down to P′W. Areas are denoted by lower-case letters, points on the axes are capital letters. Under free trade, the US’s imports of sugar are equal to the length
Infоrmаtiоn fоr questions 19-25 The following grаph depicts the supply аnd demand curves for sugar in the US. The world price of sugar under free trade is PW. If the US imposes either a tariff or a quota, the price of sugar in the US goes up to P′, while the world price goes down to P′W. Areas are denoted by lower-case letters, points on the axes are capital letters. Which of the following is true in the world market for sugar?
Infоrmаtiоn fоr questions 19-25 The following grаph depicts the supply аnd demand curves for sugar in the US. The world price of sugar under free trade is PW. If the US imposes either a tariff or a quota, the price of sugar in the US goes up to P′, while the world price goes down to P′W. Areas are denoted by lower-case letters, points on the axes are capital letters. If the US imposes a tariff that results in the figure above, which area best represents the efficiency loss resulting only from producers producing too much?
Infоrmаtiоn fоr questions 1-11 Note: for this problem, use аny informаtion only after it is given (the most important information is underlined). For example, in the beginning of the problem, the country of Leisureland is in autarky. Do not use any information given later, about the country when it is trading. The figure shows the Production Possibilities Frontier for Leisureland. There are two other countries in the world: Vacationland, which will trade with Leisureland, but only in some future questions (see below); and Workland, which never trades with anyone. To begin, Leisureland is in autarky, its autarky price of movies is $3, and its autarky price of books is $3. What minimal additional piece of information would you need to answer question 3?
Infоrmаtiоn fоr questions 1-11 Note: for this problem, use аny informаtion only after it is given (the most important information is underlined). For example, in the beginning of the problem, the country of Leisureland is in autarky. Do not use any information given later, about the country when it is trading. The figure shows the Production Possibilities Frontier for Leisureland. There are two other countries in the world: Vacationland, which will trade with Leisureland, but only in some future questions (see below); and Workland, which never trades with anyone. To begin, Leisureland is in autarky, its autarky price of movies is $3, and its autarky price of books is $3. For the remainder of this problem, ignore Workland, which will remain in autarky forever. Beginning with question 6, suppose that Leisureland did indeed engage in free international trade with Vacationland. Information to be used for the remaining questions: as trade between Leisureland and Vacationland begins, the relative price of movies in terms of books (PMOVIES/PBOOKS) becomes 1/4 in both countries. Which is closest to the country’s consumption point with trade?
Infоrmаtiоn fоr questions 1-11 Note: for this problem, use аny informаtion only after it is given (the most important information is underlined). For example, in the beginning of the problem, the country of Leisureland is in autarky. Do not use any information given later, about the country when it is trading. The figure shows the Production Possibilities Frontier for Leisureland. There are two other countries in the world: Vacationland, which will trade with Leisureland, but only in some future questions (see below); and Workland, which never trades with anyone. To begin, Leisureland is in autarky, its autarky price of movies is $3, and its autarky price of books is $3. For the remainder of this problem, ignore Workland, which will remain in autarky forever. Beginning with question 6, suppose that Leisureland did indeed engage in free international trade with Vacationland. Information to be used for the remaining questions: as trade between Leisureland and Vacationland begins, the relative price of movies in terms of books (PMOVIES/PBOOKS) becomes 1/4 in both countries. For this question only, suppose that books are the capital intensive good, while movies are the labor intensive good. Complete the sentence: Leisureland is the __________ abundant country. When it trades freely with Vacationland, real wages in Leisureland will ______________.