International trade related question.

As trade barriers have fallen in the EU, many experts expect to see more mergers between firms in Europe. What effect if any will this have on competition with Canadian and US firms? To what extent is your answer industry dependent?

Economics calculation - Consumer Surplus, Producer Surplus, Government Revenue and Deadweight losses. Given the following information pertaining to a small country A with respect to good X under free trade and with a tariff in place, calculate changes in Consumer Surplus, Producer Surplus, Government Revenue and Deadweight losses

Given the following information pertaining to a small country A with respect to good X under free trade and with a tariff in place Price of X under free trade $12 Ad Valorem tariff 10% Production of X under free trade 2,000 units Production of X with tariff in place 2,300 units Import of X under free trade 600 units Import of X with tariff in place 200 units Calculate the changes in: Consumer Surplus: -2580 Producer Surplus: 480 Government Revenue: 960 Deadweight losses: -1140

During the debate over NAFTA, opponents argue that given the relative size of the two economies, the income gains resulting from the agreement would be smaller for the US than for Mexico. Please comment on this argument in view of what you have learned about the distribution of the benefits of trade in the Classical Model.

During the debate over NAFTA, opponents argue that given the relative size of the two economies, the income gains resulting from the agreement would be smaller for the US than for Mexico. Please comment on this argument in view of what you have learned about the distribution of the benefits of trade in the Classical Model. My answer: In the Classical Model, the approach would be that there would be comparative advantage for Mexico in many different aspects. An example of this would be with the cost of labor being so low in Mexico as compared to the US, there would be an inherent advantage for anything requiring human production hours (cost per hour for labor being much less than the US... click for more

It is being incorporated as more and more of a component to international trade due to the concept of importing and exporting of same good classification whereas inter-industry is with different classifications of goods. The traditional concept of comparative advantage will do little to predict intra-industry trade. However, the following areas do help to explain intra-industry trade:

Suppose that country A has only 3 categories of traded goods and that A's imports and exports of the 3 goods are as follows: Good Value of Exports Value of Imports X $30 $100 Y 60 20 Z 60 80 My responses by section: a) Calculate Country A's index of intra-industry trade. {30/150 - 100/200} + {60/150 - 20/200} + {60/150 - 80/200 {30/150 + 100/200} + {60/150 + 20/200} + {60/150 + 80/200} [.2 - .5] + [.4 - .1] + [.4 - .4] [.2 + .5] + [ .4 + .1] + [.4 + .4] -.3 + .3 + 0 .7 + .5 + .8 0/2=0 1 - 0= 1 1 means exports=imports b) In the real world, intra-industry trade constitutes an important segment of international trade, can traditional trade theory explain thi... click for more

Payoff matrix, for two interdependent firms in duopoly

In the following payoff matrix, for two interdependent firms in duopoly: In the following payoff mat Produce Firm F DNP $10 $0 Produce -$30 $100 Firm H DNP $120 $0 $0 $0 My responses: a) What will firm F do and what will Firm H do? The only win situation for H is to produce and no production by Firm F. If Firm F is going to produce, they will have a win-win situation with Firm H having losses ($30MM) b) Suppose a subsidy of $40 is given to Firm H. With everything else remaining the same, what would each firm do based on the subsidy? And what is the effect of the subsidy on the welfare in the home country? Firm H will chose to produce as a subsidy a... click for more