Chapter 20: Q 24. (page 494)
Do consumers benefit from intra-industry trade?
Of course yes consumers are benefitted from Intra industry trade.
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You just overheard your friend say the following: “Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade.” How would you respond?
Can a nation’s comparative advantage change over
time? What factors would make it change?
Why might intra-industry trade seem surprising
from the point of view of comparative advantage?
In World Trade Organization meetings, what do
Do you think low-income countries lobby for?
Consider two countries: South Korea and Taiwan.
Taiwan can produce one million mobile phones per day at the cost of \(10 per phone and South Korea can produce 50 million mobile phones at \)5 per phone. Assume these phones are the same type and quality and there is only one price. What is the minimum price at which both countries will engage in trade?
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