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Transportation costs and comparative advantage The following graph shows a fictional world economy that consists of only two countries, Glako and Baxton. Both countries produce cars under Increasing

Transportation costs and comparative advantage The following graph shows a fictional world economy that consists of only two countries, Glako and Baxton. Both countries produce cars under Increasing-cost conditions. Note that the left-hand part of the diagram is a mirror image of a standard supply-demand diagram, and therefore the supply and demand curves slope in directions opposite their usual directions, Glako Baxton 10 00 9 8 X + -X +6 * PRICE OF CARS (Thousands of dollars) 50 4 3 2 1 De 10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8 9 10
D Х Homework (Ch 03) In the absence of trade (that is, autarky), the equilibrium price in Glako is (Hint: Enter all monetary values in full. For example, $7,000 rather than $7.) ), and the equilibrium price in Baxton is 5 I A- In the absence of trade, which of the following statements is correct? Glako has the comparative disadvantage in production of cars. O Glako and Baxton are equally good at producing cars. Glako has a comparative advantage in the production of cars. Now suppose both countries open up to international trade with each other, Microsoft OneDrive For each country, use the previous graph to compute the equaturing price, consumption and production at that price, and the quantity of exports and Imports when there are no transportation costs. Enter these amounts into the first two rows of the following table Equalizing Price Consumption at Equalizing Price Production at Equalizing Price Exports Imports (Dollars) (Cars) (Cars) (Cars) (Cars) Without Transportation Costs Glako Baxton with Transportation Costs Glako Baxton II

7. Transportation costs and comparative advantage The following graph shows a fictional world economy that consists of only t
D Х Homework (Ch 03) In the absence of trade (that is, autarky), the equilibrium price in Glako is (Hint: Enter all monetary
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Apr 12 2021 View more View Less

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