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Suppose that in DanLand two goods can be produced: light bulbs and wires. It takes 3 hours to make a light bulb in DanLand and 4 hours to make a wire in DanLand. In YouLand two goods can be produced: light bulbs and wires. It takes 6 hours to make a light bulb in YouLand and 6 hours to make a wire in YouLand. If there are 800 labor hours available in both DanLand and YouLand show graphically each country’s clearly possible combinations of light bulbs and wires that can be made if the countries do not trade. You are supposed to show the graph in your discussion IP posting, it should be viewable in your posting without any clicking links, etc. In later discussion efforts you will be required to show a graphic in a discussion posting. Which country has a comparative advantage in which good? Fully explain why. If the countries can trade, what is the pattern of trade? Fully explain. Suppose that the country with a comparative disadvantage in light bulb production (i.e. the other country has the comparative advantage in light bulb production) is contemplating putting a protective tariff on light bulbs. Provide an argument for the tariff with appropriate justification. Provide an argument against the tariff with appropriate justification. Note that in parts d.i and d.ii some groups will be benefitted and some groups will be harmed. Identify in your responses to d.i. and d.ii. who is helped by the tariff and who is harmed.

Business Economics, Economics

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