Chapter 32: Q. aFCT (page 716)
Why do you think that increased specialization in specific agricultural products has accompanied growth in African exports of those products?
Segmentation is a method of manufacture where an entity focusses on providing a narrow selection of stuff in order to improve the efficiency.
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Residents of the nation of Border Kingdom can forgo production of digital televisions and utilize all available resources to produce bottles of high-quality wine per hour. Alternatively, they can forgo producing wine and instead produce digital TVs per hour. In the neighboring country of Coastal Realm, residents can forgo production of digital TVs and use all resources to produce bottles of high-quality wine per hour, or they can forgo wine production and produce digital TVs per hour. In both nations, the opportunity costs of producing the two goods are constant.
a. What is the opportunity cost of producing digital TVs in Border Kingdom? Of producing bottles of wine in Border Kingdom?
b. What is the opportunity cost of producing digital TVs in Coastal Realm? Of producing bottles of wine in Coastal Realm?
Based on your answer to Problem 32-16, what are the total tariff revenues of the U.S. government? What percentage do U.S. consumers ultimately pay because of a higher price generated by the tariff?
Suppose that the two nations in Problem 32-4 decide to specialize in producing the good for which they have a comparative advantage and to engage in trade. Would residents of both nations find a rate of exchange of 4 bottles of wine for 1 digital TV potentially agreeable? Why or why not?
To answer Problems 32-7 and 32-8, refer to the following table, which shows possible combinations of hourly outputs of modems and flash memory drives in South Shore and neighboring East Isle, in which opportunity costs of producing both products are constant.
Why do you suppose that soil, climate, and water conditions are among the key determinants of a region's or nation's comparative advantage in production of agricultural crops? (Hint: Keep in mind that the main determinant of comparative advantage is relative opportunity costs of producing alternative items.)
Critics of the North American Free Trade Agreement (NAFTA) suggest that much of the increase in exports from Mexico to the United States now involves goods that Mexico otherwise would have exported to other nations. Mexican firms choose to export the goods to the United States, the critics argue, solely because the items receive preferential treatment under NAFTA tariff rules. What term describes what these critics are claiming is occurring with regard to U.S.-Mexican trade as a result of NAFTA? Explain your reasoning.
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