ECON 2302

ECON 2302

HOMEWORK PROBLEMS

FOR PART 8

The purpose of doing these problems is to increase your understanding of the material.

It will help you on quizzes and exams. You do not have to turn in this work. I will not go

over these problems specifically in class. Read the assigned chapters and come to class.

Check on the completed work which is on reserve in the SCC library. After doing that,

if you still have difficulties, come to see me during my office hours.

---- Dr. Cohick

1. Fill in the blanks in the second table, based on the information in the first table.

America can produce any one of these combinations of goods X and Y	Britain can produce any one of these combinations of goods X and Y
120X and 0Y	60X and 0Y
80X and 60Y	40X and 20Y
40Xand 120Y	20X and 40Y
0X and 180Y	0X and 60Y

America’s opportunity cost to produce 10 X	America’s opportunity cost to produce 10Y	Britain’s opportunity cost to produce 10 X	Britain’s opportunity cost to produce 10 Y

a. Which country should produce good X? ____________________________________

b. Which country should produce good Y? ____________________________________

2. Draw a market model for an American produced

good. Identify the price and quantity of the good in a

market with no international input.

a. Producers in other countries can bring the product

to America and make a profit by selling it for $5 less

than the price you identified above. Show this on the

graph.

b. Identify how much quantity will still be American

made and how much quantity will be imports.

c. Describe the change in jobs due to this: Jobs in

American firms ___________; jobs in importing foreign firms ____________.

d. Assume the American government imposes a tariff of $3 on the imported good. How would this change the answers you found in paragraph c. above? ___________________

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3. Why do foreign-based automobile manufacturers establish assembly plants in the United States? ___________________________________________________________

_______________________________________________________________________

4. The United States has imposed a very high tariff on imported sugar in order to protect American sugar growers, producers, and workers. How would this affect the price of sugar in the U. S. as compared to the world wide price of sugar? ___________________

_______________________________________________________________________

If you produced carbonated beverages in the U. S., what could you do to avoid this high cost of sugar? ____________________________________________________________

________________________________________________________________________

If you knew that the price of sugar was much lower in Canada, and that the importation of carbonated beverages into the U. S. had no tariff or quota, how could you exploit that fact? ___________________________________________________________________

________________________________________________________________________

5. Fill in the blanks in the following table:

The exchange rate changes from….	Has the dollar appreciated or depreciated in value?
$2=1 pound to $2.50= 1 pound
109 yen=$1 to 189 yen=$1
10 pesos=$1 to 8 pesos=$1
$1.40=1 Euro to $1.25=1 Euro
8000 Turkish lira=$1 to 8500 lira=$1

6. Fill in the blanks in the following table:

3.1447 Argentine pesos

= $1US

1 Brazilian real

= $0.5578US

______________ real

= _______________ peso

1.311 NZ dollars

= $1 US

1 Australian dollar

= $0.8832US

______________ NZ$

= _______________ Aus$

1 Czech koruna

= $0.05575 US

173.04 Hungarian forint

= $1 US

______________ koruna

= ______________ forint

3.6382 Kuwaiti dinar

= $1 US

1 Israeli shekel

= $0.261 US

______________ dinar

= ______________ shekel