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Microsoft Word - assignment1.docx CECN-707 Economics of International Trade (online course) Dr. Emilia Barbu Ryerson University Spring/Summer 2020 1 CECN 707 - Economics of International Trade (Online...

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Microsoft Word - assignment1.docx
CECN-707 Economics of International Trade (online course)
Dr. Emilia Ba
u
Ryerson University
Spring/Summer 2020
1
CECN 707 - Economics of International Trade
(Online Course)
ASSIGNMENT 1
(Covers Week 1-4)

Submission Instructions:


1. Submit your full answers to all problems in one MS word file. For problem 1 include all your tables
and graphs in the MS word or file. Any other formats will not be graded. Please, answer the
problems in order.
2. If more than one file are submitted, only one randomly selected file will be graded.
3. You must submit your file on the Assignment 1 section of D2L only. Do not forward to your
instructor. All email attachment forms or hardcopy forms of submissions will NOT be accepted.
4. The due date of the assignment is Monday, June 1st, 2020 at 11:59pm.
5. This assignment weighs 15% of your final grade.

Problem 1. (Canada's trade) [week 1] Trade data for Canada is provided by Statistics Canada. You
can access Statistics Canada at https:
www.statcan.gc.ca/eng/start . Click on “Data” tab on the top of
the page and enter the number of the required table in the Keyword(s) box. Click on the first table title
and use the “Add/Remove data” tab to indicate the specific parameters of the table you are required to
eport. From the “Basis” tab choose “balance of payments” and from “Trade” chose “Import and
Export”. Click “Apply”.

a) From table XXXXXXXXXX, obtain total merchandise imports and exports (balance of payments
asis) between Canada and the major geographical regions in the world reported in the table
from January 1998 to December 2019. Download the data as CSV (download as displayed).
) Aggregate the monthly data to annual data (i.e. sum over rows from January 1998 to December
1998 to obtain the yearly observation for XXXXXXXXXXDo the same for all years for Export and Import.
You will obtain data for Exports and Imports for 22 years (from 1998 to 2019 inclusive).
c) Construct a new table that shows, for each year, the percentage of total exports and the percentage
of total imports that went (came) from each region (compute these percentages using excel). Total
https:
www.statcan.gc.ca/eng/start
CECN-707 Economics of International Trade (online course)
Dr. Emilia Ba
u
Ryerson University
Spring/Summer 2020
2
exports and total imports are found in the downloaded table. Identify the main export and the main
import partner of Canada. Plot in the same line graph the evolution over time of the share of exports
(imports) that went to the top exporter (importer).

d) Write a
ief report (not longer than half a page at 1.5 spaces) summarizing your results in b).
Make sure that you address the following: (i) compare the areas in the world that traded the most with
Canada in 1998 and in 2019; (ii) the percentage of trade they accounted for; (iii) whether Canadian trade
was geographically more diversified or more concentrated in the 2019 than in the 1998.
Problem 2. (Ricardian model) [week 2].
Consider the following table:
Home
country
Foreign
country
Absolute
advantage
Number of computers
produced per hour
4 2 ?
Number of shoes produced
per hour
6 8 ?
Comparative advantage ? ?
a) Fill in the numerical value for the cells with the question mark.
) Which country has an absolute advantage in the production of computers? Which country
has an absolute advantage in the production of shoes?
c) What is the opportunity cost of computers in terms of shoes at Home? What is the
opportunity cost of computers in terms of shoes in Foreign?
d) Which product will Home export and which product does Foreign export? Explain why.
CECN-707 Economics of International Trade (online course)
Dr. Emilia Ba
u
Ryerson University
Spring/Summer 2020
3
What is the opportunity cost of computers in terms of shoes at home?
Problem 3. (Ricardian model) [week 2].
Two countries, Alia and Palia are closed to international trade. Alia has 1800 units of labor available,
and Palia has 900 units. Both countries can produce two goods, skis and snowboards. Alia’s unit labor
equirement in skis production is 3, while in snowboards production is 2. Palia’s unit labor requirement
in skis production is 5, while in snowboards production it is 1.

a) Graph Alia and Palia’s production possibility frontier.


) Compute Alia and Palia’s opportunity cost of skis in terms of snowboards. Explain.

c) In the absence of trade, compute the price of skis in terms of snowboards in Alia and in Palia.
Assume that consumers in each country like to consume both goods. Explain.

d) Assume now that the two countries open to trade with each other. Which country has comparative
advantage in skis? And in snowboards? Explain.
e) Construct the world relative supply curve. Show it in a graph.


Problem 4 (Heckscher-Ohlin model) [weeks 3 and 4]
Two countries, Home and Foreign, both able to produce two goods: cloth and tablet computers. The
production of both goods uses capital and labor in fixed proportions, with the tablets industry using
more capital per worker than the cloth industry. The units of each input needed to produce one unit
output are given by:


capital labor
cloth 1 2
tablets 2 1
Both countries have 150 units of capital available for production, but the Home country has 100 units of
labor whereas the Foreign country has 200. Consumers like to consume both goods and have the same
CECN-707 Economics of International Trade (online course)
Dr. Emilia Ba
u
Ryerson University
Spring/Summer 2020
4
preferences in both countries. Assume that the countries are closed to international trade.

a) Construct the PPF for both countries and put them in the same graph. Show in the graph the quantity
of both cloth and tablets that are produced by each country in equili
ium, if the countries are not
trading. Compute these quantities alge
aically.

) Which country produces more cloth relative to tablets? Indicate how this feature relates to the
country’s relative factor endowments.

c) Compute the quantities of labor and capital employed in each country in the production of each of
the goods at the output levels in a).
d) Indicate the range of prices of cloth relative to tablets at which the Home country will produce both
goods. Which good would be produced if the relative price was outside of this range?
e) In which country will the price of cloth relative to tablets be higher? Explain.

f) Assume that both countries open to trade with each other. Explain how the price of cloth relative to
trade will change in each country after opening to trade.
g) According to the Heckscher-Ohlin theorem, if these two countries opened to trade, which country
would export which good? Explain.
h) Give intuition about who will be better off and who will be worse off in each country after opening
to trade. Explain.
Problem 5. (Standard trade model) [week 4]
Assume two countries Wawa and Pawa with two factors of production: capital and labour. Each country
produces two goods: books and widgets. Books are capital intensive. Wawa is capital abundant.
Assume the same technology in both countries.
Explain the effects of an increase in a) capital stock and b) labour supply in each country.
Answered Same Day May 27, 2021

Solution

Komalavalli answered on Jun 01 2021
139 Votes
P
1a&
    a)    Trade    Principal trading partners    Jan-98    Feb-98    Mar-98    Apr-98    May-98    Jun-98    Jul-98    Aug-98    Sep-98    Oct-98    Nov-98    Dec-98    Jan-99    Feb-99    Mar-99    Apr-99    May-99    Jun-99    Jul-99    Aug-99    Sep-99    Oct-99    Nov-99    Dec-99    Jan-00    Feb-00    Mar-00    Apr-00    May-00    Jun-00    Jul-00    Aug-00    Sep-00    Oct-00    Nov-00    Dec-00    Jan-01    Feb-01    Mar-01    Apr-01    May-01    Jun-01    Jul-01    Aug-01    Sep-01    Oct-01    Nov-01    Dec-01    Jan-02    Feb-02    Mar-02    Apr-02    May-02    Jun-02    Jul-02    Aug-02    Sep-02    Oct-02    Nov-02    Dec-02    Jan-03    Feb-03    Mar-03    Apr-03    May-03    Jun-03    Jul-03    Aug-03    Sep-03    Oct-03    Nov-03    Dec-03    Jan-04    Feb-04    Mar-04    Apr-04    May-04    Jun-04    Jul-04    Aug-04    Sep-04    Oct-04    Nov-04    Dec-04    Jan-05    Feb-05    Mar-05    Apr-05    May-05    Jun-05    Jul-05    Aug-05    Sep-05    Oct-05    Nov-05    Dec-05    Jan-06    Feb-06    Mar-06    Apr-06    May-06    Jun-06    Jul-06    Aug-06    Sep-06    Oct-06    Nov-06    Dec-06    Jan-07    Feb-07    Mar-07    Apr-07    May-07    Jun-07    Jul-07    Aug-07    Sep-07    Oct-07    Nov-07    Dec-07    Jan-08    Feb-08    Mar-08    Apr-08    May-08    Jun-08    Jul-08    Aug-08    Sep-08    Oct-08    Nov-08    Dec-08    Jan-09    Feb-09    Mar-09    Apr-09    May-09    Jun-09    Jul-09    Aug-09    Sep-09    Oct-09    Nov-09    Dec-09    Jan-10    Feb-10    Mar-10    Apr-10    May-10    Jun-10    Jul-10    Aug-10    Sep-10    Oct-10    Nov-10    Dec-10    Jan-11    Feb-11    Mar-11    Apr-11    May-11    Jun-11    Jul-11    Aug-11    Sep-11    Oct-11    Nov-11    Dec-11    Jan-12    Feb-12    Mar-12    Apr-12    May-12    Jun-12    Jul-12    Aug-12    Sep-12    Oct-12    Nov-12    Dec-12    Jan-13    Feb-13    Mar-13    Apr-13    May-13    Jun-13    Jul-13    Aug-13    Sep-13    Oct-13    Nov-13    Dec-13    Jan-14    Feb-14    Mar-14    Apr-14    May-14    Jun-14    Jul-14    Aug-14    Sep-14    Oct-14    Nov-14    Dec-14    Jan-15    Feb-15    Mar-15    Apr-15    May-15    Jun-15    Jul-15    Aug-15    Sep-15    Oct-15    Nov-15    Dec-15    Jan-16    Feb-16    Mar-16    Apr-16    May-16    Jun-16    Jul-16    Aug-16    Sep-16    Oct-16    Nov-16    Dec-16    Jan-17    Feb-17    Mar-17    Apr-17    May-17    Jun-17    Jul-17    Aug-17    Sep-17    Oct-17    Nov-17    Dec-17    Jan-18    Feb-18    Mar-18    Apr-18    May-18    Jun-18    Jul-18    Aug-18    Sep-18    Oct-18    Nov-18    Dec-18    Jan-19    Feb-19    Mar-19    Apr-19    May-19    Jun-19    Jul-19    Aug-19    Sep-19    Oct-19    Nov-19    Dec-19
        Import        Dollars
            All countries    24,379.40    24,877.00    24,484.60    24,918.30    25,122.40    24,403.00    24,044.90    25,373.20    25,935.60    26,653.40    26,428.00    26,472.00    26,117.80    26,778.40    26,421.00    26,235.80    26,476.60    26,534.10    26,983.50    27,353.20    27,790.70    28,439.10    28,262.10    29,274.50    29,074.00    29,020.20    29,644.20    29,510.10    30,492.90    30,101.00    30,315.40    30,485.00    30,471.10    30,605.20    31,130.30    31,076.80    30,442.60    29,284.80    29,857.60    30,038.50    29,771.50    29,718.00    28,860.90    29,318.90    28,187.50    28,456.30    28,110.20    27,540.80    27,964.60    29,121.20    28,474.70    29,236.30    29,163.50    30,109.40    29,827.40    30,816.50    30,272.90    30,517.90    30,278.80    30,487.90    30,335.80    30,137.90    29,917.10    28,965.00    28,506.40    27,756.60    28,199.30    26,634.90    27,931.40    27,615.60    28,149.40    28,179.10    27,079.10    28,790.20    29,332.20    29,578.80    31,752.80    30,465.00    31,632.60    30,911.10    31,356.30    30,933.30    30,197.70    30,860.90    31,678.30    31,520.80    31,550.40    31,629.40    32,447.60    32,450.50    32,123.50    32,273.80    32,679.30    32,715.00    33,000.60    33,385.30    33,529.20    32,067.40    32,772.90    33,548.70    33,698.00    33,995.30    34,151.50    34,605.10    33,371.20    33,674.50    34,164.80    34,931.50    34,949.50    34,899.90    35,969.20    35,059.10    34,492.20    34,753.10    35,404.40    34,283.70    34,486.50    33,545.00    33,866.20    34,081.90    35,136.50    35,219.90    34,407.00    35,881.40    37,403.90    38,609.80    38,946.10    37,255.10    38,308.70    39,041.20    37,901.00    35,481.40    32,322.60    32,405.50    30,977.20    31,013.30    29,364.50    29,226.10    31,518.90    30,846.50    30,892.00    30,669.30    31,841.60    32,906.70    31,953.00    33,041.90    33,970.60    32,778.90    34,609.80    34,783.40    35,115.10    35,716.70    35,614.60    35,391.20    35,256.50    35,438.30    36,793.60    35,709.10    37,331.40    37,046.00    37,738.10    37,422.80    37,515.80    38,521.30    38,783.70    39,927.30    39,573.80    39,682.00    39,705.30    39,610.30    39,498.60    39,328.40    39,910.30    40,525.60    40,559.60    39,065.10    38,903.90    38,667.10    40,145.20    38,880.90    39,476.70    40,181.60    40,214.90    40,718.50    40,451.70    39,979.40    40,314.40    41,469.40    41,079.90    40,690.20    41,422.60    41,370.80    41,301.20    42,617.20    42,909.20    43,374.20    44,679.20    43,496.60    43,622.90    43,837.60    44,366.50    45,201.00    44,430.30    44,824.80    44,695.30    44,556.40    46,561.00    45,273.10    45,144.30    45,253.00    46,025.60    46,363.10    46,353.10    45,762.20    46,205.60    46,489.20    46,825.30    46,555.00    44,744.30    44,638.70    44,529.70    44,896.40    44,611.10    45,670.00    48,036.70    45,793.60    45,383.20    45,665.20    46,928.20    47,118.10    47,217.00    48,328.70    49,525.80    49,189.90    46,879.50    46,663.70    46,903.30    46,353.80    49,347.40    49,950.10    47,708.50    48,806.90    51,641.50    50,355.90    51,406.10    51,680.70    51,478.10    51,077.90    51,236.20    50,679.70    49,934.60    51,323.40    52,018.50    51,395.80    52,877.40    51,707.50    52,386.10    50,465.30    50,745.30    51,611.80    50,484.50    50,792.10    49,395.50    49,663.60
            United States    18,780.70    19,174.20    18,791.40    19,037.60    19,258.70    18,626.40    18,265.80    19,539.80    19,970.70    20,637.30    20,650.90    20,783.20    20,340.40    20,507.30    20,249.10    20,157.60    20,404.90    20,129.70    20,729.30    20,884.40    21,157.10    21,385.60    21,288.70    21,965.60    21,774.90    21,750.70    21,967.90    21,712.60    22,121.00    22,133.50    22,197.00    22,356.80    22,404.00    22,549.90    22,554.40    22,642.30    21,729.60    21,442.90    21,846.60    22,036.10    21,685.20    21,949.90    21,028.30    20,930.90    20,288.00    20,425.00    20,415.90    20,134.10    20,462.60    20,781.10    20,751.10    21,003.50    20,997.70    21,325.80    21,446.30    22,001.30    21,542.10    21,668.80    21,837.20    21,038.60    21,469.30    21,207.00    20,736.30    20,365.40    20,089.60    19,388.70    19,535.50    18,626.80    19,783.10    19,391.30    19,768.90    19,682.60    18,983.80    20,043.90    20,500.00    20,612.10    21,841.10    21,027.40    21,875.10    21,274.20    21,590.80    20,942.10    20,094.50    21,050.90    21,553.10    21,188.40    21,179.90    21,413.00    21,851.40    21,729.50    21,410.60    21,659.20    21,533.90    21,688.50    21,680.30    22,197.70    22,144.10    21,444.00    21,740.00    21,931.90    21,559.80    22,061.80    22,370.10    22,371.70    21,905.30    21,951.50    22,477.90    23,163.60    22,884.70    22,734.40    23,322.70    22,839.90    22,651.60    22,644.80    22,811.70    22,263.60    22,305.90    21,835.00    21,872.80    21,831.50    22,512.80    22,273.40    22,144.90    23,042.80    23,727.30    23,831.50    24,877.10    23,603.60    23,910.60    24,995.40    24,165.30    22,349.70    19,993.30    20,686.30    19,713.50    19,574.60    18,266.10    18,244.30    20,019.30    19,440.10    19,952.90    19,363.90    20,298.90    20,583.20    20,253.20    21,084.50    20,942.20    20,951.30    21,936.10    22,149.00    22,221.70    22,123.80    22,444.20    22,218.30    21,720.70    21,889.80    23,091.00    21,904.50    22,454.10    22,995.40    22,983.10    22,394.70    23,209.00    24,198.10    24,282.70    24,821.00    24,051.70    24,951.70    24,818.70    24,497.90    24,143.40    24,564.10    24,916.80    25,921.10    25,111.50    24,360.80    24,537.10    24,309.70    24,725.40    24,121.90    24,610.90    25,351.00    25,786.80    25,889.10    25,960.10    25,891.70    26,237.30    26,324.60    26,321.90    26,542.10    27,344.00    27,061.60    27,019.90    28,607.30    28,651.70    28,870.30    29,205.10    29,228.10    29,454.30    29,242.20    29,953.30    30,521.40    30,150.50    30,176.90    29,794.60    29,639.80    30,080.00    29,798.00    29,775.50    29,866.80    30,695.80    30,591.90    30,887.70    30,566.00    30,714.60    31,104.40    31,316.70    30,834.20    29,028.70    29,628.90    29,484.10    29,888.20    29,461.10    30,177.60    30,009.50    30,154.60    29,658.80    30,126.10    30,940.70    30,190.20    30,423.20    31,080.10    32,493.20    31,976.70    29,971.60    30,020.20    30,037.50    29,949.90    32,176.10    31,920.20    31,056.50    32,042.00    33,023.50    32,218.10    32,922.00    33,116.40    32,911.20    32,542.00    33,123.50    33,122.80    32,579.90    32,240.60    32,684.50    32,960.60    33,339.00    33,542.50    33,361.90    32,205.80    32,465.70    33,187.30    32,849.90    32,237.80    31,689.10    31,601.90
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