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Homework answers / question archive / Answer the following questions using the information from the table below
Answer the following questions using the information from the table below. Country X Country Y Good A Good B Good A Good B 90 o 60 0 60 10 40 10 30 20 20 20 0 30 0 30 a. What is the opportunity cost of producing one unit of Good A in terms of Good B for both countries? Country X: 1/3 For Country Y:10
Your answers to those questions must come from two perspective: One for a pro protectionism perspective and one for against. You must image how a pro protectionist would answer the question and again think how a person against protectionism would answer the same question. 1. Which do you favor: free trade or protection? Explain why. 2. Assume you are voting on a request before the Philippine Trade Commission to raise the tariff on imports of rice. Rice farming is major employer of Filipinos about 24% in 2018 (PSA, 2018). Rice is also a food staple of Filipinos who eat on average 109 kgs of rice per year (PSA, 2017). Increasing the tariff would save jobs and allow money from tariff to be to invest in technology and improvements in rice farming. Would you vote for or against the tariff increase? 3. More generally, what are the benefits of keeping a job in the country?
Objective/s: Explain the ideas of comparative and absolute advantage and illustrate the concepts by comparing two countries. Instructions: Imagine that two countries, Philippines and Mexico, with the production capacities in rice and tortillas listed below. Philippines Mexico Rice Tortillas Rice Tortillas 30 0 10 0 0 40 0 20 If Philippines and Mexico decided to produce only rice and tortillas, respectively, and wanted to trade with each other, both countries could benefit. Explain how. Hint: Identify the opportunity cost of producing each good for each country. Identify which country has absolute advantage. Identify the comparative advantages of each country. So, when a country has no absolute advantage it can have no comparative advantage? Why or why not?
The costs of protectionism are paid by consumers in the form of higher prices. Before the Rice Tariffication Law, the price of domestically produced rice is 34 pesos/kg on average compared to for example in Vietnam where the average price of rice is 27 pesos/kg (measured in terms of Philippine Peso) (PhilRice, n.d.). If for example consumers pay a total (by paying higher rice prices) of Php1,000,000 extra to save 100 jobs in rice farming, then the cost of saving each job is PhP10,000. The obvious question is at what point do these costs exceed the benefits? In your opinion, how much extra should consumers pay to keep a job in rice farming? (Express this figure in peso/per job.)
I.
A.
For country X, opportunity cost of one unit of good A = 30/90
For country X, opportunity cost of one unit of good A = 1/3 units of good B
For country Y, opportunity cost of one unit of good A = 30/60
For country Y, opportunity cost of one unit of good A = 1/2 or .5 unit of good B
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1.
As a pro protectionist:
I would like to favor protection, because it will save the agricultural industry and other nascent industries that are still in need of proper mechanization and modernization. With this, many jobs will also be saved and people will be able to create domestic demand and it will make economy to function properly and economy will expand.
As against protectionist:
I would like to favor free trade, because it will help the consumers in the country to get products at competitive prices and a superior quality of the products with more alternatives will be available to consumers. Further, it will save money to the consumers that can be spent on goods of other sectors and it creates demand for these products. It causes job creation in other sectors and more people can get the job. Besides, technology spillover in the country will take place to favor the local players and they become more efficient.
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2.
As a pro protectionist:
I would like to favor for the rise in import duties, and it will get more people have jobs in the farming sector and it will maintain the domestic demand. Slowly and gradually, the farming will be modernized with new technology that can be acquired with the help of funds generated via import tariff. So, prosperity will increase and chaos in societies will be prevented.
As against protectionist:
I would like to vote to reduce the tariff, so that more goods with lower price will be available to the consumers. It will increase their savings that can be used to invest in technology acquisitions. Further, competition, will help local farmers to be more efficient, consolidate and become more competitive. Besides, demand in other sectors will also increase, creating jobs in those sectors. So, tariff should be reduced.
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3.
Keeping jobs in the country, makes people as consumers maintain the purchasing power and spending. So, AD in the economy is stable and grows with stable pace. At the same time, savings also increase and it is used for the investment in different sectors. So, economy grows. It is the benefits of keeping jobs in the country. Besides, it makes consumers happy with the decision to have jobs and unemployment rate remains low. So, it is the populist decision and people vote also on this basis. It is another benefit of jobs in the country.
