Trade with powerful industrialized countries
Problem: In the light of the Ricardian model, how might you evaluate the claim by developing countries that they are at a disadvantage in trade with powerful industrialized countries?
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Explan the increasing returns to scale as a basis for international trade. Be sure that you define the relevant concepts, describe important features of such trade, and contrast these features with those of trade due to other causes.
Answer the next question on the basis of the following production possibilities data for Landia and Scandia: Refer to the above data. What would be feasible terms of trade between Landia and Scandia?
How can this concept be applied to the activities of profit making companies and profit loosing companies or to the revenue and costs components of a firm's net profit
Does either country have absolute and/or comparative advantage in any product? Provide support for your answer by computing the "resource costs" or opportunity costs for both products in both countries.
In the light of the Ricardian model, how might you evaluate the claim by developing countries that they are at a disadvantage in trade with powerful industrialized countries?
Prove that when both countries are producing both goods, the world can be made better off by allowing England and Portugal to reallocate labor and trade in accordance with the patter of comparative advantage.
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Assume the given output and labor hours for Russia and Germany in producing Wheat and Cloths. Q1. Which country has the comparative advantage in wheat? Q2. Which country has the comparative advantage in cloth?
Question 1. Why does the US have a comparative advantage in the production of manufactures? Question 2. Why does Africa have a comparative advantage in the production of food?
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