1. hw1 international trade
international trade question and need support to help me learn.
The homework will be graded based on completion
Requirements: short
ECON 2181: International Trade Theory and Policy
Homework 1
Q1. The following table shows the output of rice and machinery one labor hour can produce
in Mexico and Thailand:
What are the marginal products of labor in rice and machinery production in Thailand?
What about Mexico?
Which country has an absolute advantage in rice and which country has an absolute
advantage in machinery?
What is the autarkic price ratio of machinery relative to rice in each country?
Which country has a comparative advantage in rice and which country has a comparative
advantage in machinery?
Suppose Mexico has 1,000 labor hours available. Construct the production-possibility
frontier (PPF) and identify the optimal autarky equilibrium (using an indifference curve) for
Mexico.
Suppose the international price is set at 1 machinery:2.5 rice and Mexico decides to
completely specialize in producing the product in which it has a comparative advantage.
How would the above graph change? Use the graph to show the gains from trade and the
export and import quantities. For each unit of import good, how much is Mexico’s
gain/saving (measured in terms of the other good)?
Discussion: What are the key assumptions of the model that could lead to a discrepancy
between the model’s predictions in part f and the empirical evidence?
Your answer:
Q2. The following table shows the output of textile and auto one unit of labor can produce in
the U.K. and the U.S.:
Which country has an absolute advantage in textiles and which country has an absolute
advantage in autos?
What is the autarky price ratio of autos relative to textiles in each country?
2. Which country has a comparative advantage in textiles and which country has a
comparative advantage in autos?
Which product should each country export?
Suppose the United States has 150 units of labor available. Construct the production-
possibilities frontier (PPF) and identify the optimal autarky equilibrium (using an
indifference curve) for the United States.
Suppose the international price is set at 1 auto:3 textile and the U.S. decides to completely
specialize in producing the product in which it has a comparative advantage. How would the
above graph change? Use the graph to show the gains from trade and the export and import
quantities. For each unit of export good, how much does the U.S. gain (measured in terms of
the other good)?
Discussion: At what level of international price ratio will all the benefits from trade accrue
to the United States?
Your answer:
Q3. Please visit https://atlas.cid.harvard.edu/explore and find a country that you are most
interested in. Study its export and import patterns.
Go to this class Google Sheets here (by copying the hyperlink).
Create a new slide and write down your country of choice and your name. Do not
accidentally edit or erase others’ slides !
Download 1-2 images about the country of your choice (there is an “image download”
button at the bottom right corner of the webpage) and insert them on the slide you choose.
Provide 2-3 observations under the figure(s).
(A technical note: If the images are too large to be inserted into the Google Slides, you
can take a screenshot of the images to upload onto the slides. This can be done on a Mac by
using command+shift+4 or on a Windows computer by using the snipping tool that is
available by going to Start and typing Snipping Tool. Alternatively, you can also save the
image as a PDF file, take a snapshot there, and paste the images into the file.)
