Ecn 3000 Homework

Harris ECN 3000 Homework 1b. consumption the following information to answer questions 1-13 below. dickens countries, great of Greece and troy weight, put forward two true(p)s, ships and food, accord to the following business functions 1 ship = 4 pileus + 2 working class 1 food = 1 jacket crown + 3 labor. capital of Greece has 200 units of capital and snow units of labor avail competent to fetch ships and food. troy weight has one C units of capital and cl units of labor avail equal to produce ships and food. 1. Which good is capital intensive in intersection? Ship 2. Which good is labor intensive in turnout? Food 3.In which country is capital congenericly abundant? capital of Greece 4. In which country is labor relatively abundant? Tory 5. ground on your answers to 1 4 and using the Heckscher-Ohlin hypothesis, which country should define in the toil of which good? why? According to Heckscher-Ohlin hypothesis, countries will export products that utilise th eir abundant and cheap factors of production and bit products that utilize the countries scarce factors. As I said before, capital of Greece is capital relatively abundant, Tory is labor relatively abundant. When a matter is abundant, it becomes cheap.Thus, capital of Greece should specify in the production of ship, and troy weight should specialize in the production of food. 6. Calculate the limits of production for Athens and Troy. The limits of production for Athens 200/4=50 ships or 100/3=33 foods. The limits of production for Troy 100/4=25 ships or 150/3=50 foods. 7. Calculate the domestic name of conduct for Athens and Troy in terms of 1 ship. . 8. Based on your answer to question 7, which country should specialize in the production of which good? why? Athens MRT=0. 66 and Troys MRT=2. So we can know Athens has comparative advantage in ship, and Troy has comparative advantage in food.Thus, Athens should specialize in the production of ship, and Troy should specialize in the production of food. 9. scoop the production possibilities curves for for each one country base on your answers to questions 6 and 7. Athens 42 33 PPC CPC 0 25 50 Ships Tory 50 25 CPC PPC 0 25 38 50 Ships 10. Supposing that Athens and Troy harmonise to raft ships and food at an world-wide terms of get by of 1, what watching can you make about their relative demands for ships and food?Which country experiences the great gains from trade? 1 ship is exchanged 1 food on condition that they agree to trade ships and food at an international term of trade of 1. Athens should trade 12. 5 ships to Troy, and Troy should trade 8. 5 foods to Athens. Troy will experience the greater gains from trade. 11. Draw the consumption possibilities curve for each country on the same represent you drew for question 9. 12. Suppose Athens wants to down only 25 ships. How many an(prenominal) food will it be able to feature? How many ships and how many food would Troy be able to consume?If Athen s wants to consume only 25 ships, 58 foods will it be able to consume. 50 ships, 25 foods should Troy be able to consume. 13. Now, assume that only Athens discovers a new technology that allows it to produce ships using 1. 5 capital and 1 labor. What would be the effect on the pattern of trade between the two countries? Explain. Based on your assumption, Athens will diminution the cost of the ships. Then, the limits of production for Athens 100/1=100 ships or 100/3=33 foods. Athens maybe experiences the greater gains from trade.However, the demand of Troy cannot be ignored. Troy may not consume that many ships. 14. Suppose that instead of craft goods, Athens and Troy decide to trade 50 units of Athens capital for 25 units of Troys labor. How would the countries relative eudaimonia be affected? If this supposition were true, subsequently Athens and Troy trade capital and labor, they will have same enumerate of capital and labor. Then, the trades between these two countries arg on unnecessary. They can produce their own goods. Foods Foods