Information for questions 10-13 The world is made of five co…

Information for questions 10-13 The world is made of five countries, A, B, C, D and E. There are no transportation costs among these countries, just (possibly) tariffs. Countries A and B are considering forming a Regional Trade Agreement (RTA). If they do so, then they will have no tariffs against each other’s goods, but will keep their tariffs against countries C, D, and E. The following table lists the costs of production per barrel of oil in the five countries. Also shown are country A’s tariffs imposed on imports of oil from other countries, before and after any RTA is formed.   Cost of production ($/barrel of oil) A’s tariff ($/barrel of oil) before RTA A’s tariff ($/barrel of oil) after RTA Country A 52.50 — — Country B 36.00 5.50 0 Country C 30.50 5.50 5.50 Country D 31.10 4.90 4.90 Country E 35.30 4.90 4.90 After forming an RTA with country B, country A would import oil from:

Information for questions 13-19 There are two countries, Hom…

Information for questions 13-19 There are two countries, Home and Foreign. Labor is the only factor of production. There are two goods, X and Y. The following table shows the output of each good per hour of labor, in the two countries. Home Foreign Good X 10 8 Good Y 5 2 Which country has absolute advantage in good X?

Information for questions 10-12 The world is made of three c…

Information for questions 10-12 The world is made of three countries, A, B, and C. There are no transportation costs among these countries, just (possibly) tariffs. Countries A and B are considering forming a Regional Trade Agreement (RTA). If they do so, then they will have no tariffs against each other’s goods, but will keep their tariffs against country C’s goods. The following table lists the costs of production per unit of steel in the three countries, and also the tariffs that A imposes on steel from country B and C before the RTA is formed.   Cost of production ($/unit of steel produced) A’s tariff ($/unit of steel imported) Country A 21   Country B 15 5 Country C 11 5 This example features

Information for questions 13-19 There are two countries, Hom…

Information for questions 13-19 There are two countries, Home and Foreign. Labor is the only factor of production. There are two goods, X and Y. The following table shows the output of each good per hour of labor, in the two countries. Home Foreign Good X 10 8 Good Y 5 2 We have seen in class that if two countries trade with each other, total world production and consumption of at least one of the goods (and most likely of both goods) goes up, relative to the sum of the autarky values. Which best expresses the reason for that increase?