International Trade Assignment PDF

## INTERNATIONAL TRADE ASSIGNMENT ECF $30 ### Name: Slankey Mwelwa ### SN: EGF 22111 961 ### Q1 A) Yes it does, because the relative price of grains to items of micro-chips increases as the country goes down along the PPF Curve. B) price ratio = -(Slope) $P_b = (\frac{750}{2500} - \frac{2...

## INTERNATIONAL TRADE ASSIGNMENT ECF $30 ### Name: Slankey Mwelwa ### SN: EGF 22111 961 ### Q1 A) Yes it does, because the relative price of grains to items of micro-chips increases as the country goes down along the PPF Curve. B) price ratio = -(Slope) $P_b = (\frac{750}{2500} - \frac{2250}{1000})$ $P_b = 1$ C. Production gains * Before Specialization: * Grains: 625 * Microchips: 1921.875 * After Specialization: * Grains: 2500 * Microchips: 750 * Net Gains: * Grains: 1875 * Microchips: 1171.875 D. Gradient: -(Slope ratio) * Y = B + mx * B = y - mx * B = 1921.875 - (-1.2 x 620) * B = 2671.875 E. Point A(625, 1921.875) F. 1.2 is the Autarky point G. At point B H. Exports and Imports $P_B$ * Before Trade: * Grains: 2500 * Microchips: 750 * After Trade: * Grains: 1000 * Microchips: 2250 * Net gains * Grains: -1500 * Microchips: 1500 * Exports: 1500 grains * Imports: 1500 microchips $P_C$ * Before Trade: * Grains: 500 * Microchips: 1950 * After Trade: * Grains: 3000 * Microchips: 1450 * Net Gains * Grains: 2500 * Microchips: -500 * Export: 500 microchips * Imports: 2500 grains $P_A$ * Before Trade: * Grains: 625 * Microchips: 1921.675 * After Trade: * Grains: 3000 * Microchips: 928.123 * Net Gains * Grains: 2375 * Microchips: -2850 * Exports: 2850 microchips * Imports: 2375 grains I. No. this is because the relative price of grains in terms of microchips reduces as the country goes up along the PPF Curve. B. Price ratios $P_a$, $P_b$ and $P_c$ * $P_a = (\frac{1400-2000}{400-800}) * $P_a = 8$ * $P_b = ( \frac{475-1975}{1550-30})$ * $P_b = 1$ * $P_c = (\frac{500-1375}{425 - 250})$ * $P_c = 5$ C. (1900, 400) point A is the Autarky point. D. Before Specialization * Grains: 400 * Microchips: 1000 * After Specialization: * Grains: 50 * Microchips: 1975 * Net Gains * Grains: -350 * Micro-chips: 995 F. At point B. (1550, 475) G. Exports and imports. * Before Trade: * Grains: 400 * Microchips: 1400 * After Trade: * Grains: 200 * Microchips: 2000 * Net Gains * Grains: -200 * Microchips: 1600 * Export: 200 grains * Imports: 1600 microchips ### $P_B$ * Before Trade: * Grains: 30 * Microchips: 1975 * After trade * Grains: 1550 * Microchips: 475 * Net Gains * Grains: 1500 * Microchips: -1500 * Exports: 1500 microchips * Imports: 1500 grains ### $P_C$ * Before Trade: * Grains: 250 * Microchips: 1375 * After Trade: * Grains: 425 * Microchips: 500 * Net Gains * Grains: 175 * Microchips: -875 * Exports: 875 microchips * Imports: 175 grains ## Question 2 Capital Accumulation, Technological Advancement and Human Capital ### Capital Saving **Image:** A graph with two curves. The left curve represents the relationship between the quantity of food and the amount of capital used. The right curve represents the relationship between the quantity of food and the amount of labor used. The two curves intersect at point K. This point is labeled "$K9^0$". The curves are labeled "$Y_C$'" and "$Y_L$'" respectively. **Description:** With capital-saving technological progress, there will be an increase in the production of food with the same amount of Capital. It will require less Capital to produce the same amount of food. ### Labour Saving **Image:** A graph with two curves. The left curve represents the relationship between the quantity of clothes and the amount of capital used. The right curve represents the relationship between the quantity of clothes and the amount of labor used. The two curves intersect at point K. This point is labeled "$K9^0$". The curves are labeled "$Y_C$'" and "$Y_L$'" respectively. **Description:** With labor-saving technological progress, the same amount of clothes can be produced with less labor. This raises the marginal product of capital relative to labor. **Image:** A graph with two curves. The left curve represents the relationship between the quantity of food and the amount of capital used. The right curve represents the relationship between the quantity of clothes and the amount of capital used. The two curves intersect at a point. **Description:** Neutral technical progress allows the same quantity of clothes and food to be produced at lower units of capital and labor.