Is it possible to find equilibrium prices in a linear exchange model for six countries whose directed graph looks like the one below, and why? The arrows have the usual meaning, for example, the arrow from A to B means that country A is selling its product to country B. A BA C- D F E a. No, because it is not possible to go from C to F following the arrows. O b. Yes, because it is possible to go from any country to any other country following the arrows. Oc. Yes, as long as the countries' governments are conservative. O d. Yes, as long as inflation is low. e. No, because equilibrium prices never exist.

Is it possible to find equilibrium prices in a linear exchange model for six countries whose directed graph looks like the one below, and why? The arrows have the usual meaning, for example, the arrow from A to B means that country A is selling its product to country B. A BA C- D F E a. No, because it is not possible to go from C to F following the arrows. O b. Yes, because it is possible to go from any country to any other country following the arrows. Oc. Yes, as long as the countries' governments are conservative. O d. Yes, as long as inflation is low. e. No, because equilibrium prices never exist.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 30P: In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10...

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In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
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