Saudi Arabia | United States | ||
---|---|---|---|
Quantity of oil (millions of barrels) | Quantity of cars (millions) | Quantity of oil (millions of barrels) | Quantity of cars (millions) |
0 | 4 | 0 | 10.0 |
200 | 3 | 100 | 7.5 |
400 | 2 | 200 | 5.0 |
600 | 1 | 300 | 2.5 |
800 | 0 | 400 | 0 |
What is the opportunity cost of producing a car in Saudi Arabia? In the United States? What is the opportunity cost of producing a barrel of oil in Saudi Arabia? In the United States?
Which country has the comparative advantage in producing oil? In producing cars?
Suppose that in autarky, Saudi Arabia produces 200 million barrels of oil and 3 million cars; similarly, that the United States produces 300 million barrels of oil and 2.5 million cars. Without trade, can Saudi Arabia produce more oil and more cars? Without trade, can the United States produce more oil and more cars?
What is the total quantity of oil produced? What is the total quantity of cars produced?
Is it possible for Saudi Arabia to consume 400 million barrels of oil and 5 million cars and for the United States to consume 400 million barrels of oil and 5 million cars?
Suppose that, in fact, Saudi Arabia consumes 300 million barrels of oil and 4 million cars and the United States consumes 500 million barrels of oil and 6 million cars. How many barrels of oil does the United States import? How many cars does the United States export? Suppose a car costs $10,000 on the world market. How much, then, does a barrel of oil cost on the world market?
Draw the U.S. and Canadian production possibility frontiers in two separate diagrams, with CDs on the horizontal axis and lumber on the vertical axis.
In autarky, if the United States wants to consume 500 CDs, how much lumber can it consume at most? Label this point A in your diagram. Similarly, if Canada wants to consume 1 ton of lumber, how many CDs can it consume in autarky? Label this point C in your diagram.
Which country has the absolute advantage in lumber production?
Which country has the comparative advantage in lumber production?
How many CDs does the United States produce? How much lumber does Canada produce?
Is it possible for the United States to consume 500 CDs and 7 tons of lumber? Label this point B in your diagram. Is it possible for Canada at the same time to consume 500 CDs and 1 ton of lumber? Label this point D in your diagram.
The United States exports software to Venezuela, and Venezuela exports oil to the United States.
The United States exports airplanes to China, and China exports clothing to the United States.
The United States exports wheat to Colombia, and Colombia exports coffee to the United States.
Look up data for U.S. imports of hats and caps: in step (vi), select “(315) Apparel & Accessories” and in step (vii), select “(315991) Hats and Caps.” From which country do we import the most hats and caps? Which of the three sources of comparative advantage (climate, factor endowments, and technology) accounts for that country’s comparative advantage in hat and cap production?
Look up data for U.S. imports of grapes: in step (vi), select “(111) Agricultural Products” and in step (vii), select “(111332) Grapes.” From which country do we import the most grapes? Which of the three sources of comparative advantage (climate, factor endowments, and technology) accounts for that country’s comparative advantage in grape production?
Look up data for U.S. imports of food product machinery: in step (vi), select “(333) Machinery, Except Electrical” and in step (vii), select “(333294) Food Product Machinery.” From which country do we import the most food product machinery? Which of the three sources of comparative advantage (climate, factor endowments, and technology) accounts for that country’s comparative advantage in food product machinery?
What happened to the value of U.S. imports of hats and caps from China between 2000 and 2010?
What prediction does the Heckscher–Ohlin model make about the wages received by labor in China?
Shoes are labor-intensive and satellites are capital-intensive to produce. The United States has abundant capital. China has abundant labor. According to the Heckscher–Ohlin model, which good will China export? Which good will the United States export? In the United States, what will happen to the price of labor (the wage) and to the price of capital?
Price of jet (millions) | Quantity of jets demanded | Quantity of jets supplied |
---|---|---|
$120 | 100 | 1,000 |
110 | 150 | 900 |
100 | 200 | 800 |
90 | 250 | 700 |
80 | 300 | 600 |
70 | 350 | 500 |
60 | 400 | 400 |
50 | 450 | 300 |
40 | 500 | 200 |
In autarky, how many commercial jet airplanes does the United States produce, and at what price are they bought and sold?
With trade, what will the price for commercial jet airplanes be? Will the United States import or export airplanes? How many?
A French importer buys a case of California wine for $500.
An American who works for a French company deposits her paycheck, drawn on a Paris bank, into her San Francisco bank.
An American buys a bond from a Japanese company for $10,000.
An American charity sends $100,000 to Africa to help local residents buy food after a harvest shortfall.
As U.S.-owned assets abroad increased as a percentage of foreign GDP, does this mean that the United States, over the period, experienced net capital outflows?
Does this diagram indicate that world economies were more tightly linked in 2010 than they were in 1980?
In the economy of Scottopia in 2010, exports equaled $400 billion of goods and $300 billion of services, imports equaled $500 billion of goods and $350 billion of services, and the rest of the world purchased $250 billion of Scottopia’s assets. What was the merchandise trade balance for Scottopia? What was the balance of payments on current account in Scottopia? What was the balance of payments on financial account? What was the value of Scottopia’s purchases of assets from the rest of the world?
In the economy of Popania in 2010, total Popanian purchases of assets in the rest of the world equaled $300 billion, purchases of Popanian assets by the rest of the world equaled $400 billion, and Popania exported goods and services equal to $350 billion. What was Popania’s balance of payments on financial account in 2010? What was its balance of payments on current account? What was the value of its imports?
Based on the exchange rates for the first trading days of 2011 and 2012 shown in the accompanying table, did the U.S. dollar appreciate or depreciate during 2011? Did the movement in the value of the U.S. dollar make American goods and services more or less attractive to foreigners?
January 3, 2011 | January 3, 2012 |
---|---|
US$1.55 to buy 1 British pound sterling | US$1.57 to buy 1 British pound sterling |
29.08 Taiwan dollars to buy US$1 | 30.28 Taiwan dollars to buy US$1 |
US$0.99 to buy 1 Canadian dollar | US$1.01 to buy 1 Canadian dollar |
81.56 Japanese yen to buy US$1 | 76.67 Japanese yen to buy US$1 |
US$1.34 to buy 1 euro | US$1.31 to buy 1 euro |
0.93 Swiss franc to buy US$1 | 0.93 Swiss franc to buy US$1 |
Go to http://fx.sauder.ubc.ca. Using the table labeled “The Most Recent Cross-Rates of Major Currencies,” determine whether the British pound (GBP), the Canadian dollar (CAD), the Japanese yen (JPY), the euro (EUR), and the Swiss franc (CHF) have appreciated or depreciated against the U.S. dollar (USD) since January 3, 2012. The exchange rates on January 3, 2012, are listed in the table in Problem 13 above.
Japan relaxes some of its import restrictions.
The United States imposes some import tariffs on Japanese goods.
Interest rates in the United States rise dramatically.
A report indicates that Japanese cars last much longer than previously thought, especially compared with American cars.
Price of orange | Quantity of oranges demanded (thousands) | Quantity of oranges supplied (thousands) |
---|---|---|
$1.00 | 2 | 11 |
0.90 | 4 | 10 |
0.80 | 6 | 9 |
0.70 | 8 | 8 |
0.60 | 10 | 7 |
0.50 | 12 | 6 |
0.40 | 14 | 5 |
0.30 | 16 | 4 |
0.20 | 18 | 3 |
Draw the U.S. domestic supply curve and domestic demand curve.
With free trade, how many oranges will the United States import or export?
Suppose that the U.S. government imposes a tariff on oranges of $0.20 per orange.
How many oranges will the United States import or export after introduction of the tariff?
In your diagram, shade the gain or loss to the economy as a whole from the introduction of this tariff.
Mexican and U.S. consumers of tomatoes. Illustrate the effect on consumer surplus in your diagram.
Mexican and U.S. producers of tomatoes. Illustrate the effect on producer surplus in your diagram.
Mexican and U.S. tomato workers.
Mexican and U.S. consumers of poultry. Illustrate the effect on consumer surplus in your diagram.
Mexican and U.S. producers of poultry. Illustrate the effect on producer surplus in your diagram.
Mexican and U.S. poultry workers.
Inflation is 10% in the United States and 5% in Japan; the U.S. dollar–Japanese yen exchange rate remains the same.
Inflation is 3% in the United States and 8% in Mexico; the price of the U.S. dollar falls from 12.50 to 10.25 Mexican pesos.
Inflation is 5% in the United States and 3% in the euro area; the price of the euro falls from $1.30 to $1.20.
Inflation is 8% in the United States and 4% in Canada; the price of the Canadian dollar rises from US$0.60 to US$0.75.