This one is a big long but worth it. This is a chance to earn more points (up to 20). Effort matters. You may still get a high score on this problem set even if every answer is not exactly correct as long as you are close and show that you really tried. 

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• Globalization and Trade Problem Set

  Globalization and Trade Problem Set[1]

   

  Use the following table to answer questions 1 through 12.

   

  The table below describes production possibilities for Mexico and Nigeria. Each number in the table shows the number of workers needed to produce one unit of the product.

  Country	Shoes	Glasses
  Mexico	10	12
  Nigeria	18	5

   

  1. Suppose that both countries have 90 workers. What is the opportunity cost of producing Shoes in Mexico?

  __________ Glasses

   

  2. Suppose that both countries have 90 workers. What is the opportunity cost of producing Glasses in Mexico?

  __________ Shoes

   

  3. Suppose that both countries have 90 workers. What is the opportunity cost of producing Shoes in Nigeria?

  __________ Glasses

   

  4. Suppose that both countries have 90 workers. What is the opportunity cost of producing Glasses in Nigeria?

  __________ Shoes

   

  5. Suppose that both countries have 90 workers. Which country has an absolute advantage in producing Shoes?

• Nigeria
• Neither country
• Mexico

• 6. Suppose that both countries have 90 workers. Which country has an absolute advantage in producing Glasses?

• Nigeria
• Neither country
• Mexico

•  

  7. Suppose that both countries have 90 workers. Which country has a comparative advantage in producing Glasses?

• Nigeria
• Neither country
• Mexico

•  

  8. Suppose that both countries have 90 workers. Which country has a comparative advantage in producing Shoes?

• Nigeria
• Neither country
• Mexico

•  

  9. Suppose that both countries have 90 workers. Which country should be specializing in the production of Glasses?

• Nigeria
• Neither country
• Mexico

•  

  10. Suppose that both countries have 90 workers. Which country should be specializing in the production of Shoes?

• Nigeria
• Neither country
• Mexico

•  

  11. Suppose that both countries have 90 workers. Which country should be exporting Shoes?

• Nigeria
• Neither country
• Mexico
•  

   

  12. Suppose that both countries have 90 workers. Which country should be exporting Glasses?

• Nigeria
• Neither country
• Mexico

•  

   

  Use the following graph to answer questions 13 through 20.

   

  The graph below shows the supply and demand curves and the world price for bagels.

  

   

  13. What is the equilibrium price if this country does not trade?

   

  14. What is the equilibrium quantity if this country does not trade?

   

  15. What is the world price?

   

  16. What is domestic quantity demanded at the world price?

   

  17. What is the amount of the domestic supply at the world price?

   

  18. At this world price, this country will

• Import bagels
• Neither import nor export
• Export bagels

•  

  19. What is the amount of the imports at the world price?

   

  20. What is the size of the gains from trade at the world price?

   

   

   

   

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  [1] This assignment by Lumen Learning is licensed under a Creative Commons Attribution 4.0 International License. You can access an alternative means to plotting points at https://www.desmos.com/calculator.