HCHUNGW的部落格

Problems and Answers to Chapter 2

Q1: Canada and Australia are (mainly) English-speaking countries with populations that are not too different in size (Canada’s is 60 percent larger). But Canadian trade is twice as large, relative to GDP, as Australia’s. Why should this be the case? 

加拿大和澳大利亞都是英語國家，兩國的人口規模也相當（加拿大多60%），但是相對各自的GDP而言，加拿大的貿易額是澳大利亞的兩倍，為什麼如此？

A1:According to Gravity Model, GDP is not the only factor to explain the volume of

trade between two countries, because distance is also an important factor. Considering

the distance, the transportation cost of Australia is relatively higher than that of

Canada, so the attractiveness of trade is reduced. However, Canada is close to the

USA which is a large economy while Australia is not close to any large economy,

making Canada more open while Australia is more autarky.

GDP 不是解釋兩國貿易量的唯一重要因素，距離也是至關重要的因素之一。

考慮到距離，澳大利亞的進出口運輸成本相對更高，因此減少了貿易吸引力。

因為加拿大與美國相鄰，而澳大利亞不與任何一個大經濟體相鄰，這使得加拿

大更加開放，而澳大利亞更加自給自足。

Q2:Mexico and Brazil have very different trading patterns. Mexico trades mainly

with the United States, Brazil trades about equally with the United States and with the

European Union; Mexico does much more trade relative to its GDP. Explain these

differences using the gravity model. 

墨西哥和巴西各自的貿易模式不同。墨西哥主要與美國貿易，巴西與美國和

歐盟的貿易量大致相當。墨西哥的貿易量相對其GDP而言很大。用引力模型

解釋這種現象。

A2:Mexico is close to the United States, but is very far from the European Union, so

Mexico’s value of trade with the United States is large. Brazil is far from both the

United States and European Union, thus, Brazil’s volume of trade with the United

States and with the European Union is generally equivalent. Mexico’s volume of trade

is larger than Brazil’s, for two reasons: one is that Mexico is adjacent to the United

States which is a large economy; the other is that Mexico is one of the members of

NAFTA. Brazil is far from any large economy, and the size of the economy for the

countries which have signed free trade agreements with Brazil is relatively small. 

墨西哥與美國毗鄰，但是距離歐盟很遠，因此它與美國的貿易量很大。巴西

離美國和歐盟都很遠，因此巴西與美國和歐盟的貿易量大致相當。墨西哥貿易

量比巴西大，其原因一方面由於墨西哥離大經濟體美國近，另一方面由於它是

北美貿易協定的成員國之一。巴西遠離任何一個大經濟體，與它簽訂自由貿易

協定的國家經濟規模都比較小。

Q3:Equation (2.1) says that trade between any two countries is proportional to the

product of their GDPs. Does this mean that the GDP of every country in the world

were to increase by 50%, world trade would increase by 125%? Analyze the question

using the simple example shown in Table 2-2.

方程(2.1) 表明兩個國家之間的貿易和它們的GDP乘積成正比。這是否意味著如果

每個國家的GDP增加50%, 世界的貿易量就增加125%？分析這個問題用表格2-2

的簡單例子。

A3:Yes. If both countries’GDP increase by 50%, other things equal, multiplying the

right hand side of equation (2.1) by (1+50%)*(1+50%)=225% and multiplying the left

hand side of equation (2.1) by 1+125%=225%, therefore, the volume of trade will increase 125%. Using Table 2-2, if four countries’GDP all increase 50%, the volume of trade will increase 125% correspondingly, so the first line of the table will become: —1.6*225%=3.6       0.4*225% =0.9       0.4*225% =0.9     Country A’s GDP increases to 4*(1+50%) =6 > (3.6+0.9+0.9= 5.4). According to the assumption, the results are reasonable because the results mean that part of country A’s income is consumed on imports and part of country A’s income is

consumed on domestic products, although the portion consumed domestically is smaller than that of imports.

是的。如果兩個國家的GDP均增加50%，其他條件不變，方程(2.1) 的右邊乘以(1+50%)*(1+50%)=225%, 方程式的左邊乘以1+125%=225%，所以，世界的貿易量就增加125%。結合表格2-2，如果四個國家的GDP都增加50%倍，貿易量也增加125%，則表格第一行的資料應為：—1.6*225%=3.6       0.4*225% =0.9       0.4*225% =0.9     A國的GDP增加到4*(1+50%)=6 > (3.6+0.9+0.9= 5.4)。根據假設，這個結果是合理的因為這意味著A國的支出一部分從國外進口一部分收入用於消費本國的產品，雖然用於本國消費的部分少於對其他國家的進口。

Q4: Over the past few decades, East Asian economies have increased their share of

world GDP. Similarly, intra-East Asian trade --- that is, trade among East Asian

nations --- has grown as a share of world trade. More than that, East Asian countries

3 do an increasing share of their trade with each other. Explain why, using the gravity

model.

在過去的幾十年中，東亞國家增加了它們在世界GDP中的份額。同樣，不

僅東亞國家整體的貿易在世界貿易中的份額增加了，而且東亞國家內相互間的

貿易也增加了。應用引力模型解釋這一現象。

A4:

In the past, East Asian countries are all small economies, meaning that their size

of economies is small and they are unable to import a lot of goods. As these East

Asian countries become richer, the demand increases and they can import more than

before. Considering that East Asian countries have been rich countries, they become

trading partners with each other; however, they mainly imported goods from rich

countries. Based on gravity model, even if the distance between South Korea and

Taiwan is small, the volume of the two countries is very small due to their small size

of economies. But now, because their GDP have increased, the volume of trade

between the two countries increased correspondingly.

之前，東亞國家都是小經濟體，這說明它們的市場規模很小，不能大量進口。隨著它們越來越富裕，消費需求增加，它們也就能更多地進口了。這樣，之前它們主要向富國出口，現在它們自己成為了富國，互相也就成為了貿易對象。根據引力模型，當韓國和臺灣GDP

規模很小時，意味著儘管兩國的距離很近，但是兩國之間的貿易量很小。現在它們GDP增加了，它們之間的貿易量也隨之增大了。

Q5:A century ago, most French imports came from relatively distant locations: North

America, Latin America, and Asia. Today, most French imports come from other

European countries. How does this fit with the changing types of goods that make up

world trade?

一個世紀以前，法國的進口產品來自相對遙遠的地區：北美、拉丁美洲，和

亞洲。今天，法國絕大部分進口產品來自其他歐洲國家。這種變化是如何迎合

不斷變化的世界貿易產品結構的？

A5:A century ago, each country’s trading products are determined by the country’

s climate and geography. The climate and natural resources endowments in French are

very similar to that of other European countries; therefore, French can only import

different products, such as, cotton, rubber, and etc, from other western hemisphere

(North America, Latin America) and Asia. However, after industrial revolution,

manufacturing trade increased dramatically. With the development of transportation

and communicate technology, French’s trade volume with other European countries

increases correspondingly, as the gravity model predicted directly. 

 一個世紀以前，各國貿易產品是由氣候和地理條件決定的。法國的氣候和自

然資源稟賦和歐洲其他國家很相似，這樣法國只能從西半球其他國家、亞洲進

口像棉花、橡膠這樣的產品，從歐洲其他國家進口產品很少。工業革命之後，

製造品貿易增長，並且隨著交通和通訊的改進繼續擴張，因此法國轉向與歐洲

其他經濟體大量開展貿易是自然而然的，這就是引力模型的一個直接預測。

Chapter 3

1．Home has 1200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2.

 a．Graph out the production possibilities frontier:

\* MERGEFORMAT

  b．What is the opportunity cost of apples in terms of bananas?

c．In the absence of trade, what would the price of apples in terms of bananas be?

     In the absence of trade, since labor is the only factor of production and supply decisions are determined by the attempts of individuals to maximize their earnings in a competitive economy, only when will both goods be produced. So

在沒有貿易時，因為勞方是唯一的生產要素，並且供應決定取決於個體嘗試最大化他們的在競爭經濟的收入，只有當兩件物品將被生產。 因此

2．Home is as described in problem 1. There is now also another country, Foreign, with a labor force of 800. Foreign’s unit labor requirement in apple production is 5, while in banana production it is 1.

\* MERGEFORMAT   a．Graph Foreign’s production possibilities frontier:

b．Construct the world relative supply curve.

3．Now suppose world relative demand takes the following form: Demand for apples/demand for bananas = price of bananas/price of apples.

  a．Graph the relative demand curve along with the relative supply curve:

     ∵When the market achieves its equilibrium, we have

∴RD is a hyperbola

 b．What is the equilibrium relative price of apples?

   The equilibrium relative price of apples is determined by the intersection of the RD and RS curves.

    RD:

    RS:

    ∴

    ∴

c．Describe the pattern of trade.

   ∵

   ∴In this two-country world, Home will specialize in the apple production, export apples and import bananas. Foreign will specialize in the banana production, export bananas and import apples. 

d．Show that both Home and Foreign gain from trade.

      International trade allows Home and Foreign to consume anywhere within the colored lines, which lie outside the countries’ production possibility frontiers. And the indirect method, specializing in producing only one production then trade with other country, is a more efficient method than direct production. In the absence of trade, Home could gain three bananas by foregoing two apples, and Foreign could gain by one foregoing five bananas. Trade allows each country to trade two bananas for one apple. Home could then gain four bananas by foregoing two apples while Foreign could gain one apple by foregoing only two bananas. So both Home and Foreign gain from trade.

國際貿易允許本國和外國任何地方在分界線之內消耗，在一國生產可能性邊境之外說謊。 並且間接方法，專門研究導致一生產比直接生產然後只換與其他國家，是一個高效率的方法。 在沒有貿易時，首頁可能由前面二個蘋果獲取三個香蕉，並且外國可能由一前面五個香蕉獲取。 貿易允許每個國家為一個蘋果換二個香蕉。 首頁只能由前面二個蘋果然後獲取四個香蕉，當外國時能由前面二個香蕉獲取一個蘋果。 因此首頁和從貿易的外國獲取。

4．Suppose that instead of 1200 workers, Home had 2400. Find the equilibrium relative price. What can you say about the efficiency of world production and the division of the gains from trade between Home and Foreign in this case?

RD:

    RS:

    ∴

    ∴

    In this case, Foreign will specialize in the banana production, export bananas and import apples. But Home will produce bananas and apples at the same time. And the opportunity cost of bananas in terms of apples for Home remains the same. So Home neither gains nor loses but Foreign gains from trade.

在這種情況下，外國將專門研究香蕉生產，出口香蕉和進口蘋果。 但是本國同時將生產香蕉和蘋果。 並且香蕉的機會成本根據蘋果的本國的依然是同樣。 因此本國不獲取也不丟失，而是從貿易的外國獲取。

5．Suppose that Home has 2400 workers, but they are only half as production in both industries as we have been assuming, Construct the world relative supply curve and determine the equilibrium relative price. How do the gains from trade compare with those in the case described in problem 4?

In this case, the labor is doubled while the productivity of labor is halved, so the ＂effective labor＂remains the same. So the answer is similar to that in 3. And both Home and Foreign can gain from trade. But Foreign gains lesser compare with that in the case 4.

6．”Korean workers earn only $2.50 an hour; if we allow Korea to export as much as it likes to the United States, our workers will be forced down to the same level. You can’t import a $5 shirt without importing the $2.50 wage that goes with it.” Discuss.

   In fact, relative wage rate is determined by comparative productivity and the relative demand for goods. Korea’s low wage reflects the fact that Korea is less productive than the United States in most industries. Actually, trade with a less productive, low wage country can raise the welfare and standard of living of countries with high productivity, such as United States. So this pauper labor argument is wrong.

實際上，相對工資率取決於比較生產力和對物品的相對需求。 Korea’s低工資反射事實韓國比多數產業的美國較不有生產力的。 實際上，與一個較不有生產力，低工資國家的貿易可能培養國家福利和生活水準有高生產力的，例如美國。 因此這個叫花子勞方論據是錯誤的。

7．Japanese labor productivity is roughly the same as that of the United States in the manufacturing sector (higher in some industries, lower in others), while the United States, is still considerably more productive in the service sector. But most services are non-traded. Some analysts have argued that this poses a problem for the United States, because our comparative advantage lies in things we cannot sell on world markets. What is wrong with this argument?

   The competitive advantage of any industry depends on both the relative productivities of the industries and the relative wages across industries. So there are four aspects should be taken into account before we reach conclusion: both the industries and service sectors of Japan and U.S., not just the two service sectors. So this statement does not bade on the reasonable logic.

所有產業的競爭優勢取決於產業的相對生產力和橫跨產業的親戚薪水。 因此，在我們得出結論之前，有四個方面應該考慮到： 產業和日本和美國，不僅二個服務部門的服務部門。 不因此這個聲明在合理的邏輯出了價。

8．Anyone who has visited Japan knows it is an incredibly expensive place; although Japanese workers earn about the same as their U.S. counterparts, the purchasing power of their incomes is about one-third less. Extend your discussing from question 7 to explain this observation. (Hint: Think about wages and the implied prices of non-trade goods.)

   The relative higher purchasing power of U.S. is sustained and maintained by its considerably higher productivity in services. Because most of those services are non-traded, Japanese could not benefit from those lower service costs. And U.S. does not have to face a lower international price of services. So the purchasing power of Japanese is just one-third of their U.S. counterparts.

美國的相對更高的購買力由它的在服務的相當地更高的生產力承受並且維護。 由於大多那些服務non-traded，日語不可能受益於那些更低的服務費用。 並且美國不必須面對服務的一個更低的國際價格。 因此日語的購買力是他們的美國相對物的三分之一。

9．How does the fact that many goods are non-traded affect the extent of possible gains from trade?

   Actually the gains from trade depended on the proportion of non-traded goods. The gains will increase as the proportion of non-traded goods decrease.

10．We have focused on the case of trade involving only two countries. Suppose that there are many countries capable of producing two goods, and that each country has only one factor of production, labor. What could we say about the pattern of production and in this case? (Hint: Try constructing the world relative supply curve.)

    Any countries to the left of the intersection of the relative demand and relative supply curves export the good in which they have a comparative advantage relative to any country to the right of the intersection. If the intersection occurs in a horizontal portion then the country with that price ratio produces both goods. 

Chapter 4

< >In 1986, the price of oil on world markets dropped sharply. Since the United States is an oil-importing country, this was widely regarded as good for the U.S. economy. Yet in Texas and Louisiana 1986 was a year of economic decline. Why?It can deduce that Texas and Louisiana are oil-producing states of United States. So when the price of oil on world markets declined, the real wage of this industry fell in terms of other goods. This might be the reason of economic decline in these two states in 1986.

2。An economy can produce good 1 using labor and capital and good 2 using labor and land. The total supply of labor is 100 units. Given the supply of capital, the outputs of the two goods depends on labor input as follows:

To analyze the economy’s production possibility frontier, consider how the output mix changes as labor is shifted between the two sectors.

< >Graph the production functions for good 1 and good 2.  \* MERGEFORMAT

\* MERGEFORMAT

< >Graph the production possibility frontier. Why is it curved?

    The PPF is curved due to declining marginal product of labor in each good. The total labor supply is fixed. So as L₁ rises, MPL₁ falls; correspondingly, as L₂ falls, MPL₂ rises. So PP gets steeper as we move down it to the right.

< >The marginal product of labor curves corresponding to the production functions in problem2 are as follows:

< >Suppose that the price of good 2 relative to that of good 1 is 2. Determine graphically the wage rate and the allocation of labor between the two sectors.With the assumption that labor is freely mobile between sectors, it will move from the low-wage sector to the high-wage sector until wages are equalized. So in equilibrium, the wage rate is equal to the value of labor’s marginal product.

假設勞方自由地是在區段之間的機動性，它從低工資的區段將移動向high-wage區段，直到薪水被調平。 因此在平衡，工資率與labor’s邊際產品的價值是相等的。

The abscissa of point of intersection illustrated above should be between (20, 30). Since we only have to find out the approximate answer, linear function could be employed.

The labor allocation between the sectors is approximately L₁=27 and L₂=73. The wage rate is approximately 0.98.

被說明的交點橫坐標以上應該之間(20， 30)。 因為我們必須只發現近似答覆，線性函數可能被使用。在區段之間的The辛苦分派是大約L1=27和L2=73。 工資率是大約0.98。

< >Using the graph drawn for problem 2, determine the output of each sector. Then confirm graphically that the slop of the production possibility frontier at that point equals the relative price.

   The relative price is P₂/P₁=2 and we have got the approximate labor allocation, so we can employ the linear function again to calculate the approximate output of each sector: Q₁=44 and Q₂=90.

相對價格是P2/P1=2，並且我們有近似辛苦分派，因此我們可以再使用線性函數計算每個區段近似產品： Q1=44和Q2=90。

< >Suppose that the relative price of good 2 falls to 1. Repeat (a) and (b).

The relative decline in the price of good 2 caused labor to be reallocated: labor is drawn out of production of good 2 and enters production of good 1 (Ｌ₁=62, L₂=38). This also leads to an output adjustment, that is, production of good 2 falls to 68 units and production of good 1 rises to 76 units. And the wage rate is approximately equal to 0.74.

 在導致的價格的相對衰落的好2將被再分配的勞方： 勞方被畫出於生產好2並且輸入好1的生產(Ｌ1=62， L2=38)。 這也導致輸出調整，即，好2個秋天到68個單位的生產和生產好1上升到76個單位。 並且工資率是大約相等到0.74。

< >Calculate the effects of the price change on the income of the specific factors in sectors 1 and 2.With the relative price change from P₂/P₁=2 to P₂/P₁=1, the price of good 2 has fallen by 50 percent, while the price of good 1 has stayed the same. Wages have fallen too, but by less than the fall in P₂ (wages fell approximately 25 percent). Thus, the real wage relative to P₂ actually rises while real wage relative to P₁ falls. Hence, to determine the welfare consequence for workers, the information about their consumption shares of good 1 and good 2 is needed.

相對價格變動，而價格的好1停留了同樣，從P2/P1=2到P2/P1=1，價格的好2由50%下落了。 薪水由較少比在P2的秋天下落了，但是(薪水落大約25%)。 因此，當實際工資相對P1落時，實際工資相對P2實際上上升。 因此，確定工作者的福利救濟後果，關於他們的消耗量份額的資訊好1和好2是需要的。

< >In the text we examined the impacts of increases in the supply of capital and land. But what if the mobile factor, labor, increases in supply?Analyze the qualitative effects of an increase in the supply of labor in the specific factors model, holding the price of both goods constant.For an economy producing two goods, X an Y, with labor demands reflected by their marginal revenue product curves, there is an initial wage of w₁ and an initial labor allocation of L_x=O_xA and L_y=O_yA. When the supply of labor increases, the right boundary of the diagram illustrated below pushed out to O_y’. The demand for labor in sector Y is pulled rightward with the boundary. The new intersection of the labor demand curves shows that labor expands in both sectors, and therefore output of both X and Y also expand. The relative expansion of output is ambiguous. Wages paid to workers fall.

< >Graph the effect on the equilibrium for the numerical example in problems 2 and 3, given a relative price of 1, when the labor force expands from 100 to 140. With the law of diminishing returns, the new production possibility frontier is more concave and steeper (flatter) at the ends when total labor supply increases.

L₁ increase to 90 from 62 and L₂ increases to 50 from 38. Wages decline from 0.74 to 0.60. This new allocation of labor leads to a new output mix of approximately Q₁=85 and Q₂=77.

Chapter 4

< >In the United States where land is cheap, the ratio of land to labor used in cattle rising is higher than that of land used in wheat growing. But in more crowded countries, where land is expensive and labor is cheap, it is common to raise cows by using less land and more labor than Americans use to grow wheat. Can we still say that raising cattle is land intensive compared with farming wheat? Why or why not?   The definition of cattle growing as land intensive depends on the ratio of land to labor used in production, not on the ratio of land or labor to output. The ratio of land to labor in cattle exceeds the ratio in wheat in the United States, implying cattle is land intensive in the United States. Cattle is land intensive in other countries too if the ratio of land to labor in cattle production exceeds the ratio in wheat production in that country. The comparison between another country and the United States is less relevant for answering the question.

< >Suppose that at current factor prices cloth is produced using 20 hours of labor for each acre of land, and food is produced using only 5 hours of labor per acre of land. Suppose that the economy’s total resources are 600 hours of labor and 60 acres of land. Using a diagram determine the allocation of resources.

           We can solve this algebraically since L=LC+LF=600 and T=TC+TF=60.

           The solution is LC=400, TC=20, LF=200 and TF=40.

< >Now suppose that the labor supply increase first to 800, then 1000, then 1200 hours. Using a diagram like Figure4-6, trace out the changing allocation of resources. 

< >What would happen if the labor supply were to increase even further?At constant factor prices, some labor would be unused, so factor prices would have to change, or there would be unemployment.

< >“The world’s poorest countries cannot find anything to export. There is no resource that is abundant — certainly not capital or land, and in small poor nations not even labor is abundant.” Discuss.The gains from trade depend on comparative rather than absolute advantage. As to poor countries, what matters is not the absolute abundance of factors, but their relative abundance. Poor countries have an abundance of labor relative to capital when compared to more developed countries.

< >The U.S. labor movement — which mostly represents blue-collar workers rather than professionals and highly educated workers — has traditionally favored limits on imports form less-affluent countries. Is this a shortsighted policy of a rational one in view of the interests of union members? How does the answer depend on the model of trade?In the Ricardo’s model, labor gains from trade through an increase in its purchasing power. This result does not support labor union demands for limits on imports from less affluent countries.

In the Immobile Factors model labor may gain or lose from trade. Purchasing power in terms of one good will rise, but in terms of the other good it will decline.

The Heckscher-Ohlin model directly discusses distribution by considering the effects of trade on the owners of factors of production. In the context of this model, unskilled U.S. labor loses from trade since this group represents the relatively scarce factors in this country. The results from the Heckscher-Ohlin model support labor union demands for import limits.

< >There is substantial inequality of wage levels between regions within the United States. For example, wages of manufacturing workers in equivalent jobs are about 20 percent lower in the Southeast than they are in the Far West. Which of the explanations of failure of factor price equalization might account for this? How is this case different from the divergence of wages between the United States and Mexico (which is geographically closer to both the U.S. Southeast and the Far West than the Southeast and Far West are to each other)?When we employ factor price equalization, we should pay attention to its conditions: both countries/regions produce both goods; both countries have the same technology of production, and the absence of barriers to trade. Inequality of wage levels between regions within the United States may caused by some or all of these reasons.

Actually, the barriers to trade always exist in the real world due to transportation costs. And the trade between U.S. and Mexico, by contrast, is subject to legal limits; together with cultural differences that inhibit the flow of technology, this may explain why the difference in wage rates is so much larger.

< >Explain why the Leontief paradox and the more recent Bowen, Leamer, and Sveikauskas results reported in the text contradict the factor-proportions theory.The factor proportions theory states that countries export those goods whose production is intensive in factors with which they are abundantly endowed. One would expect the United States, which has a high capital/labor ratio relative to the rest of the world, to export capital-intensive goods if the Heckscher-Ohlin theory holds. Leontief found that the United States exported labor-intensive goods. Bowen, Leamer and Sveikauskas found that the correlation between factor endowment and trade patterns is weak for the world as a whole. The data do not support the predictions of the theory that countries' exports and imports reflect the relative endowments of factors.

< >In the discussion of empirical results on the Heckscher-Ohlin model, we noted that recent work suggests that the efficiency of factors of production seems to differ internationally. Explain how this would affect the concept of factor price equalization.    If the efficiency of the factors of production differs internationally, the lessons of the Heckscher-Ohlin theory would be applied to “effective factors” which adjust for the differences in technology or worker skills or land quality (for example). The adjusted model has been found to be more successful than the unadjusted model at explaining the pattern of trade between countries. Factor-price equalization concepts would apply to the effective factors. A worker with more skills or in a country with better technology could be considered to be equal to two workers in another country. Thus, the single person would be two effective units of labor. Thus, the one high-skilled worker could earn twice what lower skilled workers do and the price of one effective unit of labor would still be equalized.

Chapter 6

< >For each of the following examples, explain whether this is a case of external or internal economies of scale:Most musical wind instruments in the United States are produced by more than a dozen factories in Elkhart, Indiana.All Hondas sold in the United States are either imported or produced in Marysville, Ohio.All airframes for Airbus, Europe’s only producer of large aircraft, are assembled in Toulouse, France.Hartford, Connecticut is the insurance capital of the northeastern United States. External economies of scale: Cases a and d. The productions of these two industries concentrate in a few locations and successfully reduce each industry's costs even when the scale of operation of individual firms remains small. External economies need not lead to imperfect competition. The benefits of geographical concentration may include a greater variety of specialized services to support industry operations and larger labor markets or thicker input markets. 

Internal economies of scale: Cases b and c. Both of them occur at the level of the individual firm. The larger the output of a product by a particular firm, the lower its average costs. This leads to imperfect competition as in petrochemicals, aircraft, and autos.

< >In perfect competition, firm set price equal to marginal cost. Why isn’t this possible when there are internal economies of scale?Unlike the case of perfectly competitive markets, under monopoly marginal revenue is not equal to price. The profit maximizing output level of a monopolist occurs where marginal revenue equals marginal cost. Marginal revenue is always less than price under imperfectly competitive markets because to sell an extra unit of output the firm must lower the price of all units, not just the marginal one.

< >It is often argued that the existence of increasing returns is a source of conflict between countries, since each country is better off if it can increase its production in those industries characterized by economies of scale. Evaluate this view in terms of both the monopolistic competition and the external economy models.Both internal economies of scale (which may lead to monopolistic competition) and external economies of scale could lead to increasing returns.

    By concentrating the production of each good with economies of scale in one country rather than spreading the production over several countries, the world economy will use the same amount of labor to produce more output.

In the monopolistic competition model, the concentration of labor benefits the host country. The host country can capture some monopoly rents. But the rest of the world may hurt and have to face higher prices on its consumption goods.

In the external economies case, such monopolistic pricing behavior is less likely since imperfectly competitive markets are less likely.

< >Suppose the two countries we considered in the numerical example on pages 132-135 were to integrate their automobile marker with a third country with an annual market for 3.75 million automobiles. Find the number of firms, the output per firm, and the price per automobile in the new integrated market after trade.

    However, since you will never see 0.8 firms, there will be 15 firms that enter the market, not 16 firms since the last firm knows that it can not make positive profits. The rest of the solution is straight-forward. Using X=S/n, output per firm is 41,666 units. Using the price equation, and the fact that c=5,000, yields an equilibrium price of $7,000.

< >Evaluate the relative importance of economies of scale and comparative advantage in causing the following:Most of the world’s aluminum is smelted in Norway or Canada.Half of the world’s large jet aircraft are assembled in Seattle.Most semiconductors are manufactured in either the United States or Japan.Most Scotch whiskey comes from Scotland.Much of the world’s best wine comes from France. a. The relatively few locations for production suggest external economies of scale in production. If these operations are large, there may also be large internal economies of scale in production.

b. Since economies of scale are significant in airplane production, it tends to be done by a small number of (imperfectly competitive) firms at a limited number of locations. One such location is Seattle, where Boeing produces.

c. Since external economies of scale are significant in semiconductor production, semiconductor industries tend to be concentrated in certain geographic locations. If, for some historical reason, a semiconductor is established in a specific location, the export of semiconductors by that country is due to economies of scale and not comparative advantage.

d. "True" scotch whiskey can only come from Scotland. The production of scotch whiskey requires a technique known to skilled distillers who are concentrated in the region. Also, soil and climactic conditions are favorable for grains used in local scotch production.  This reflects comparative advantage.

e. France has a particular blend of climactic conditions and land that is difficult to reproduce elsewhere. This generates a comparative advantage in wine production.

< >There are some shops in Japan that sell Japanese goods imported back from the United States at a discount over the prices charged by other Japanese shops. How is this possible?    The Japanese producers employ price discrimination across United States and Japanese markets, so that the goods sold in the United States are much cheaper than those sold in Japan. It may be profitable for other Japanese to purchase these goods in the United States, incur any tariffs and transportation costs, and resell the goods in Japan. Clearly, the price differential across markets may lead to such profitable chance.

< >Consider a situation similar to that in Figure 6-9, in which two countries that can produce a good are subject to forward-falling supply curves. In this case, however, suppose that the two countries have the same costs, so that their supply curves are identical.What would you expect to be the pattern of international specialization and trade?What would determine who produces the good?

Suppose two countries that can produce a good are subject to forward-falling supply curves and are identical countries with identical curves. If one country starts out as a producer of a good, i.e. it has a head start even as a matter of historical accident, then all production will occur in that particular country and it will export to the rest of the world.

< >What are the benefits of international trade in this case? Do they accrue only to the country that gets the industry?       Consumers in both countries will pay a lower price for this good when external economies are maximized through trade and all production is located in a single market. In the present example, no single country has a natural cost advantage or is worse off than it would be under autarky.

< >It is fairly common for an industrial cluster to break up and for production to move to locations with lower wages when the technology of the industry is no longer rapidly improving—when it is no longer essential to have the absolutely most modern machinery, when the need for highly skilled workers has declined, and when being at the cutting edge of innovation conveys only a small advantage. Explain this tendency of industrial clusters to break up in terms of the theory of external economies.     External economies are important for firms as technology changes rapidly and as the “cutting edge” moves quickly with frequent innovations. As this process slows, manufacturing becomes more normal and standard and there is less advantage brought by external economies. Instead, firms look for low cost production locations. Since external economies are no longer important, firms find little advantage in being clustered and it is likely that low-wage locations will be chosen.

CHAPTER7

1.      The marginal product of labor in Home is 10 and in Foreign is 18.  Wages are higher in Foreign, so workers migrate there to the point where the marginal product in both Home and Foreign is equated.  This occurs when there are 7 workers in each country, and the marginal product of labor in each country is 14. 

2.      There is no incentive to migrate when there is factor price equalization.  This occurs when both countries produce both goods and when there are no barriers to trade (the problem assumes technology is the same in the two countries).  A tariff by country A increases the relative price of the protected good in that country and lowers its relative price in the country B.  If the protected good uses labor relatively intensively, the demand for labor in country A rises, as does the return to labor, and the return to labor in the country B falls.  These results follow from the Stolper-Samuelson theory, which states that an increase in the price of a good raises the return to the factor used intensively in the production of that good by more than the price increase.  These international wage differentials induce migration from country B to country A.

3.      The analysis of intertemporal trade follows directly the analysis of trade of two goods.  Substitute "future consumption" and "present consumption" for "cloth" and "food."  The relevant relative price is the cost of future consumption compared to present consumption, which is the inverse of the real interest rate.  Countries in which present consumption is relatively cheap (which have low real interest rates) will "export" present consumption (i.e. lend) to countries in which present consumption is relatively dear (which have high real interest rates). The equilibrium real interest rate after borrowing and lending occur lies between that found in each country before borrowing and lending take place.  Gains from borrowing and lending are analogous to gains from trade--there is greater efficiency in the production of goods intertemporally.

4.      Foregoing current consumption allows one to obtain future consumption.  There will be a bias towards future consumption if the amount of future consumption which can be obtained by foregoing current consumption is high.  In terms of the analysis presented in this chapter, there is a bias towards future consumption if the real interest rate in the economy is higher in the absence of international borrowing or lending than the world real interest rate.

a.       The large inflows of immigrants means that the marginal product of capital will rise as more workers enter the country.  The real interest rate will be high, and there will be a bias towards future consumption.

b.       The marginal product of capital is low and thus there is a bias towards current consumption.

c.       The direction of the bias depends upon the comparison of the increase in the price of oil and the world real interest rate.  Leaving the oil in the ground provides a return of the increase in the price of oil whereas the world real interest rate may be higher or lower than this increase.

d.        Foregoing current consumption allows exploitation of resources, and higher future consumption.  Thus, there is a bias towards future consumption.

e.       The return to capital is higher than in the rest of the world (since the country's rate of growth exceeds that of the rest of the world), and there is a bias toward future consumption.

5. a.    $10 million is not a controlling interest in IBM, so this does not qualify as direct foreign investment.  It is international portfolio diversification. 

b.   This is direct foreign investment if one considers the apartment building a business which pays returns in terms of rents.

c.   Unless particular U.S. shareholders will not have control over the new French company, this will not be direct foreign investment.

d.   This is not direct foreign investment since the Italian company is an "employee," but not the ones which ultimately control, the company.

6.    In terms of location, the Karma company has avoided Brazilian import restrictions.  In terms of internalization, the firm has retained its control over the  technology by not divulging its patents.

chapter 8

1.        The import demand equation, MD, is found by subtracting the home supply equation from the home demand equation.  This results in MD = 80 - 40 x P.  Without trade, domestic prices and quantities adjust such that import demand is zero. Thus, the price in the absence of trade is 2.

2.  a.   Foreign's export supply curve, XS,  is XS = -40 + 40 x P.  In the absence of trade, the price is 1.

b.   When trade occurs export supply is equal to import demand, XS = MD.  Thus, using the equations from problems 1 and 2a,  P = 1.50, and the volume of trade is 20. 

3.  a.   The new MD curve is 80 - 40 x (P+t) where t is the specific tariff rate, equal to 0.5. (Note: in solving these problems you should be careful about whether a specific tariff or ad valorem tariff is imposed. With an ad valorem tariff, the MD equation would be expressed as MD=80-40 x(1+t)P). The equation for the export supply curve by the foreign country is unchanged.  Solving, we find that the world price is $1.25, and thus the internal price at home is $1.75.  The volume of trade has been reduced to 10, and the total demand for wheat at home has fallen to 65 (from the free trade level of 70). The total demand for wheat in Foreign has gone up from 50 to 55. 

b.   and c.  The welfare of the home country is best studied using the combined numerical and graphical solutions presented below in Figure 8-1.

where the areas in the figure are:

a: 55(1.75-1.50) -.5(55-50)(1.75-1.50)=13.125

b: .5(55-50)(1.75-1.50)=0.625

c: (65-55)(1.75-1.50)=2.50

d: .5(70-65)(1.75-1.50)=0.625

e: (65-55)(1.50-1.25)=2.50

Consumer surplus change: -(a+b+c+d)=-16.875. Producer surplus change: a=13.125. Government revenue change: c+e=5. Efficiency losses b+d are exceeded by terms of trade gain e. [Note: in the calculations for the a, b, and d areas a figure of .5 shows up. This is because we are measuring the area of a triangle, which is one-half of the area of the rectangle defined by the product of the horizontal and vertical sides.]

4.       Using the same solution methodology as in problem 3, when the home country is very small relative to the foreign country, its effects on the terms of trade are expected to be much less.  The small country is much more likely to be hurt by its imposition of a tariff. Indeed, this intuition is shown in this problem. The free trade equilibrium is now at the price $1.09 and the trade volume is now $36.40. 

 With the imposition of a tariff of 0.5 by Home, the new world price is $1.045, the internal home price is $1.545, home demand is 69.10 units, home supply is 50.90 and the volume of trade is 18.20.  When Home is relatively small, the effect of a tariff on world price is smaller than when Home is relatively large.  When Foreign and Home were closer in size, a tariff of .5 by home lowered world price by 25 percent, whereas in this case the same tariff lowers world price by about 5 percent. The internal Home price is now closer to the free trade price plus t than when Home was relatively large.  In this case, the government revenues from the tariff equal 9.10, the consumer surplus loss is 33.51, and the producer surplus gain is 21.089. The distortionary losses associated with the tariff (areas b+d) sum to 4.14 and the terms of trade gain (e) is 0.819. Clearly, in this small country example the distortionary losses from the tariff swamp the terms of trade gains.  The general lesson is the smaller the economy, the larger the losses from a tariff since the terms of trade gains are smaller.

5.       The effective rate of protection takes into consideration the costs of imported intermediate goods. In this example, half of the cost of an aircraft represents components purchased from other countries.  Without the subsidy the aircraft would cost $60 million.  The European value added to the aircraft is $30 million. The subsidy cuts the cost of the value added to purchasers of the airplane to $20 million.  Thus, the effective rate of protection is (30 - 20)/20 = 50%.

6.       We first use the foreign export supply and domestic import demand curves to determine the new world price. The foreign supply of exports curve, with a foreign subsidy of 50 percent per unit, becomes XS = -40 + 40(1+0.5) x P.  The equilibrium world price is 1.2 and the internal foreign price is 1.8.  The volume of trade is 32.  The foreign demand and supply curves are used to determine the costs and benefits of the subsidy.  Construct a diagram similar to that in the text and calculate the area of the various polygons.  The government must provide (1.8 - 1.2) x 32 = 19.2 units of output to support the subsidy.  Foreign producers surplus rises due to the subsidy by the amount of 15.3 units of output.  Foreign consumers surplus falls due to the higher price by 7.5 units of the good.  Thus, the net loss to Foreign due to the subsidy is 7.5 + 19.2 - 15.3 = 11.4 units of output.  Home consumers and producers face an internal price of 1.2 as a result of the subsidy.  Home consumers surplus rises by 70 x .3 + .5 (6 x.3) = 21.9 while Home producers surplus falls by 44 x .3 + .5(6 x .3) = 14.1, for a net gain of 7.8 units of output.

7.      At a price of $10 per bag of peanuts, Acirema imports 200 bags of peanuts.  A quota limiting the import of peanuts to 50 bags has the following effects:

a.   The price of peanuts rises to $20 per bag.

b.  The quota rents are ($20 - $10) x 50 = $500.

c.  The consumption distortion loss is .5 x 100 bags x $10 per bag = $500.

d.  The production distortion loss is .5 x  50 bags x  $10 per bag = $250.

Chapter 9

1.      The arguments for free trade in this quote include:

     Free trade allows consumers and producers to make decisions based upon the marginal cost and benefits associated with a good when costs and prices are undistorted by government policy.

     The Philippines is "small," so it will have little scope for influencing world prices and capturing welfare gains through an improvement of its terms of trade.

     "Escaping the confines of a narrow domestic market" allows possible gains through economies of scale in production.

     Free trade "opens new horizons for entrepreneurship."

     Special interests may dictate trade policy for their own ends rather than for the general welfare.  Free trade policies may aid in halting corruption where these special  interests exert undue or disproportionate influence on public policy.

2.  a.   This is potentially a valid argument for a tariff, since it is based on an assumed ability of the United States to affect world prices -- that is, it is a version of the optimal tariff argument.  If the United States is concerned about higher world prices in the future, it could use policies which encourage the accumulation of oil inventories and minimize the potential for future adverse shocks.

b.   Sharply falling prices benefit U.S. consumers, and since these are off-season grapes and do not compete with the supplies from U.S. producers, the domestic producers are not hurt.  There is no reason to keep a luxury good expensive.

c.   The higher income of farmers due to export subsidies and the potentially higher income to those who sell goods and services to the farmers comes at the expense of consumers and taxpayers. Unless there is some domestic market failure, an export subsidy always produces more costs than benefits. Indeed, if the goal of policy is to stimulate the demand for the associated goods and services, policies should be targeted directly at these goals.

d.   There may be external economies associated with the domestic production of semiconductors. This is a potentially a valid argument. But the gains to producers of protecting the semiconductor industry must as always be weighed against the higher costs to consumers and other industries which pervasively use the chips. A well-targeted policy instrument would be a production subsidy. This has the advantage of directly dealing with the externalities associated with domestic chip production.

e.   Thousands of homebuyers as consumers (as well as workers who build the homes for which the timber was bought) have benefited from the cheaper imported timber.  If the goal of policy is to soften the blow to timber workers, a more efficient policy would be direct payments to timber workers in order to aid their relocation.

3.       Without tariffs, the country produces 100 units and consumes 300 units, thus importing 200 units.

a.   A tariff of 5 per unit leads to production of 125 units and consumption of 250 units.  The increase in welfare is the increase due to higher production of 25 x 10 minus the losses to consumer and producer surplus of (25 x 5)/2 and (50 x 5)/2, respectively, leading to a net gain of 62.5.

b.   A production subsidy of 5 leads to a new supply curve of S = 50 + 5 x(P+5).  Consumption stays at 300, production rises to 125, and the increase in welfare equals the benefits from greater production minus the production distortion costs, 25 x 10 - (25 x 5)/2 = 187.5.

c.   The production subsidy is a better targeted policy than the import tariff since it directly affects the decisions which reflect a divergence between social and private costs while leaving other decisions unaffected. The tariff has a double-edged function as both a production subsidy and a consumption tax. 

d.   The best policy is to have producers fully internalize the externality by providing a subsidy of 10 per unit. The new supply curve will then be S = 50 + 5 x(P+10), production will be 150 units, and the welfare gain from this policy will be 50 x 10 - (10 x 50)/2 =250.

4.        The government's objective is to maximize consumers surplus plus its own revenue plus twice the amount of producers surplus. A tariff of 5 per unit improves producers surplus by 562.5, worsens consumers surplus by 1375, and leads to government revenue of 625. The tariff results in an increase in the government's objective function of 375.

5.        The United States has a legitimate interest in the trade policies of other countries, just as other countries have a legitimate interest in U.S. activities. The reason is that uncoordinated trade policies are likely to be inferior to those based on negotiations. By negotiating with each other, governments are better able both to resist pressure from domestic interest groups and to avoid trade wars of the kind illustrated by the Prisoners' Dilemma example in the text.

6.  a.   While tariffs are legal, the United States is obliged to offer compensation for any unilateral tariff increase by reducing other tariffs to compensate the affected exporting country.

b.   Export subsidies on agricultural products are legal under GATT.

c.   This is not legal under GATT because the United States is not offering compensating reductions in other tariffs on Canadian goods. Interestingly, in the late 1980s, U.S. efforts to protect the shakes and shingles industry were met with an outcry and Canadian threats of a trade war. These protectionist efforts by the United States were rescinded.

d.   This is legal under GATT since the action is taken by Canada on its own exports.

e.   This is legal under GATT since it does not involve any direct export subsidies.

f.    This is legal under GATT and, in fact, may help increase the benefits from trade.

7.      The potential economic costs associated with the entrance of Poland and Hungary into an expanded EU depend largely on whether their membership results in trade creation or trade diversion. In particular, Poland and Hungary will gain if they engage in new trade with Western Europe although they might lose if trade within the European Union simply replaces trade which had been occurring with Eastern bloc countries.  Furthermore, both of these nations will face at least higher structural unemployment during the transition period. Some of the negative effects on workers might be lessened if labor mobility is permitted across borders.

The Western nations should also be concerned on the trade creation versus trade diversion aspects of the entry of Poland and Hungary. For distributional and political  reasons, they may be concerned about whether the prices of their own products will be driven down by competition or whether the entrants will simply bring to the Western markets an expanded variety of products and scope for additional scale economies of production.  Workers in Western markets may be concerned that inflows of foreign labor drive down wages, although, as we have observed in previous chapters, the nominal wage shifts should be considered in light of changes in the prices of consumption goods.  Countries outside of the EU, such as the United States and Japan, would express concern if the supplies of products to the EU by Poland and Hungary substitute for goods previously supplied by the United States and Japan. The large outsiders, however, could reap substantial positive gains from having expanded access to the consumers of Poland and Hungary.

其中專業理論知識內容包括：保安理論知識、消防業務知識、職業道德、法律常識、保安禮儀、救護知識。作技能訓練內容包括：崗位操作指引、勤務技能、消防技能、軍事技能。

二．培訓的及要求培訓目的

安全生產目標責任書

為了進一步落實安全生產責任制，做到“責、權、利”相結合，根據我公司2015年度安全生產目標的內容，現與財務部簽訂如下安全生產目標：

一、目標值：

1、全年人身死亡事故為零，重傷事故為零，輕傷人數為零。

2、現金安全保管，不發生盜竊事故。

3、每月足額提取安全生產費用，保障安全生產投入資金的到位。

4、安全培訓合格率為100%。

二、本單位安全工作上必須做到以下內容：

1、對本單位的安全生產負直接領導責任，必須模範遵守公司的各項安全管理制度，不發佈與公司安全管理制度相抵觸的指令，嚴格履行本人的安全職責，確保安全責任制在本單位全面落實，並全力支持安全工作。

2、保證公司各項安全管理制度和管理辦法在本單位內全面實施，並自覺接受公司安全部門的監督和管理。

3、在確保安全的前提下組織生產，始終把安全工作放在首位，當“安全與交貨期、品質”發生矛盾時，堅持安全第一的原則。

4、參加生產碰頭會時，首先彙報本單位的安全生產情況和安全問題落實情況；在安排本單位生產任務時，必須安排安全工作內容，並寫入記錄。

5、在公司及政府的安全檢查中杜絕各類違章現象。

6、組織本部門積極參加安全檢查，做到有檢查、有整改，記錄全。

7、以身作則，不違章指揮、不違章操作。對發現的各類違章現象負有查禁的責任，同時要予以查處。

8、虛心接受員工提出的問題，杜絕不接受或盲目指揮；

9、發生事故，應立即報告主管領導，按照“四不放過”的原則召開事故分析會，提出整改措施和對責任者的處理意見，並填寫事故登記表，嚴禁隱瞞不報或降低對責任者的處罰標準。

10、必須按規定對單位員工進行培訓和新員工上崗教育；

11、嚴格執行公司安全生產十六項禁令，保證本單位所有人員不違章作業。

三、 安全獎懲：

1、對於全年實現安全目標的按照公司生產現場管理規定和工作說明書進行考核獎勵；對於未實現安全目標的按照公司規定進行處罰。

2、每月接受主管領導指派人員對安全生產責任狀的落