Economics Homework
Use the following information to answer questions 1-4.
A. China exports shoes to the US
B. The US exports movies to China.
C. The price of movies in the US is $12.
D. The price of a pair of shoes in China is ¥40.
E. The exchange rate is ¥1 = $0.15.
1. What the price of a pair of shoes in China? ¥40 = ¥___.
2. How many yuan can someone buy with $1? ___ dollars
3. How many movies does the US give up to obtain 1 pair of shoes when it trades with China? The US gives up ____ movies per pair of shoes.
4. How many pairs of shoes does the China give up to obtain 1 movie when it trades with the US? China gives up ____ pairs of shoes per movie.
Use the following information to answer questions 5 and 6.
Andy and Betty each own 10 acres of land.
A. Each acre of land Andy owns can produce either 100 cucumbers or 50 tomatoes.
B. Each acre of land Bety owns can produce either 60 cucumbers or X tomatoes.
C. Andy has an absolute advantage in growing tomatoes.
D. Betty has a comparative advantage in growing tomatoes.
5. Pick a value for X that satisfies conditions C and D.
What value did you pick? X = ___.
6. Use your answer in question 5 to complete the following table.
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Setting
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Number of cucumbers Andy consumes
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Number of tomatoes Betty consumes
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Number of cucumbers Betty consumes
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Number of tomatoes Betty consumes
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Andy uses 5 acres to grow cucumbers and 5 to grow tomatoes and does not trade with Betty.
Betty uses 5 acres to grow cucumbers and 5 to grow tomatoes and does not trade with Andy.
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Andy uses 10 acres to grow cucumbers and exports ½ of them to Betty.
Betty uses 10 acres to grow tomatoes and exports ½ of them to Andy,
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The first row should show how much Andy and Betty consume when they use ½ of their acres to grow cucumbers and ½ to grow tomatoes and do not trade. The second row should show how much Andy and Betty consume when they specialize and trade ½ of what they grow with each other
7) Using the concepts and material in lessons 1-6, write a compelling argument to convince Donald Trump and Bernie Sanders that a trade agreement that reduces barriers to trade is mutually beneficial to both trading partners.
8) Do you agree with the argument that you made in question 1? Why or why not?