# Essays on 8 Questions Solve Math Problem

The autarky price ratio of the price of wool Y in units of computers W in the two countriesIn Australia P y/Pw = WAGES Australia x HOURS Australia y/WAGES Australia x hours Australia w =5/60= 0.083 meaning the price of wool is 0.083 computersIn japan P y/Pw = WAGES japan x HOURS japan y/WAGES japan x hours japan w =4/32= 0.125 meaning the price of wool is 0.125 computersOpportunity costs (Australia)Wool computers 5/60 = 0.083 60/5= 12 Opportunity costs (Japan) Wool computers 4/32 = 0.125 32/4= 8 Japan has an absolute advantage in both wool and computers since it requires fewer resources to produce and equal amount of goods.

Australia has a comparative advantage in wool since from the autarky price ratio relative the price of wool is less in Australia. From the opportunity cost it is also clear that Australia can produce wool with lower opportunity cost. Japan has comparative advantage in computers because it can produce computers with lower opportunity cost than Australia. From the autarky price Australia will have to export wool to japan while Australia will have to import computers from japanQuestion one (b)In autarky in Australia it takes twelve wools to buy a computer.

If it only takes nine wools to import the same computer Australia will save 5.3 days of labour /computer. In Japan, in autarky it takes 1/8 of a computer 4 days to acquire one computer if with trade it only takes 1/9 of a computer 3.56 days/wool, Japan saves 0.44 days/wool import. Australia saves 5 days of labor/computer; Japan saves 1.1 days of labor/wool. As the international terms of trade move close to those of Australia in autarky, the benefits that accrue to Japan rise and the benefits that accrue to Australia reduces. Question one ( c)Question four (a)The demand curve of VCRs set: Pd=500-20*QThe supply curve of VCRs set Ps=20*QPrice of VCRs is 250.

The quantity demanded and quantity supplied is 50 Question four (b)Consumer surplus is triangles black. Thus, this area is equal to0.5*50*250=6250Producer surplus is triangles red. Thus, this area is equal to0.5*50*250=6250Question four (c)Produced 20, consumed 80, and imported 60Consumer surplus 0.5*400*80=16000 the consumer surplus increases by 9750Producer surplus0.5*20*100=1000 the producer surplus decreases by 5220Question four (d)With the tax of Australia government imposed on VCRs set, price increase to 225.

Quantity of TV sets supplied by Australian producers: 20 to 45. The quantity of TV sets demanded: 80 to 67.5 Volume of trade: 60 to 20Question four (e)The reduction in new consumer surplus: （225-100）*67.5+（20*100）/2=\$5219. Welfare loss: -5219Effect of consumption: 500The effects of protective: -\$4000 The redistributive effect: \$3250.Revenue Effect: 20* \$50(tariffs) = \$1000.Question four (f)The welfare Deadweight loss is equal to change in consumer surplus added to change in producer surpluses added to change in government revenue.

Change in consumer surplus: (-) 0.5*(67.5+80)*100=7375Change in producer surpluses (+) 0.5*(45+20)*100=3250Change in government revenue (+) 100*(67.5-45) =2250Welfare Deadweight loss: -7375+3250+2250=-1875Hence, the amount of deadweight welfare loss imposed on the Australian economy by the tariff is 1875.Question six (a)Good X in country A IIT={(1-| Xij-Mij|/ (Xij+mij)}*100 ={1-|5000-3000|/8000}*100=75Good Y in country A: IIT= {(1-| Xij-Mij|/ (Xij+mij)} = 0.6