« previous next »

Author Question: Suppose that two countries, A and B, employ the same technology in the production of a good. ... (Read 53 times)

mp14

  • Hero Member
  • *****
  • Posts: 534
on: Jun 30, 2018
Suppose that two countries, A and B, employ the same technology in the production of a good. External economies of scale apply in both countries.
 
  Analyze the effects of trade on long-run production levels if country A has a comparatively lower cost of production when trade begins.

Question 2

A government program that attempts to stimulate growth in the production of goods in which the country has a potential future comparative advantage is an example of a(n) ________ policy.
 
  A) primary-export-led
  B) import-substitution development
  C) outward-looking development
  D) linkage-effect


lkoler

  • Sr. Member
  • ****
  • Posts: 358
Reply #1 on: Jun 30, 2018
Answer to Question 1

Initially, country B will have a comparative advantage in production of the good. Over time, as production shifts to Country B, costs will decline there while increasing in country A. In the absence of market intervention, country B will have a monopoly. Note that no individual firm will have a monopoly unless internal economies of scale also apply.

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

It is important to read food labels and choose foods with low cholesterol and saturated trans fat. You should limit saturated fat to no higher than 6% of daily calories.

Did you know?

To prove that stomach ulcers were caused by bacteria and not by stress, a researcher consumed an entire laboratory beaker full of bacterial culture. After this, he did indeed develop stomach ulcers, and won the Nobel Prize for his discovery.

Did you know?

Nearly 31 million adults in America have a total cholesterol level that is more than 240 mg per dL.

Did you know?

The most dangerous mercury compound, dimethyl mercury, is so toxic that even a few microliters spilled on the skin can cause death. Mercury has been shown to accumulate in higher amounts in the following types of fish than other types: swordfish, shark, mackerel, tilefish, crab, and tuna.

Did you know?

Stevens-Johnson syndrome and Toxic Epidermal Necrolysis syndrome are life-threatening reactions that can result in death. Complications include permanent blindness, dry-eye syndrome, lung damage, photophobia, asthma, chronic obstructive pulmonary disease, permanent loss of nail beds, scarring of mucous membranes, arthritis, and chronic fatigue syndrome. Many patients' pores scar shut, causing them to retain heat.

projections of future oil production projections of future oil production
Ten Leading Causes of Death in Low-Income Countries, 2008 Ten Leading Causes of Death in Low-Income Countries, 2008
Ten Leading Causes of Death in High-Income Countries, 2008 Ten Leading Causes of Death in High-Income Countries, 2008
Carrots are a good source of vitamin A Carrots are a good source of vitamin A
ATP Production in Cardiac Muscle ATP Production in Cardiac Muscle
Let f be a real function with domain R. Suppose that for each ǫ > 0, there is a continuous ... Let f be a real function with domain R. Suppose that for each ǫ > 0, there is a continuous ...
Video: Structures that affect circulation - kidneys and blood volume and skeletal muscle pumping

For a complete list of videos, visit our video library