Question.4217 -
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PHPWord body {font-family: 'Arial'; font-size: 11pt;} * {font-family: 'Arial'; font-size: 11pt;} a.NoteRef {text-decoration: none;} hr {height: 1px; padding: 0; margin: 1em 0; border: 0; border-top: 1px solid #CCC;} table {border: 1px solid black; border-spacing: 0px; width : 100%;} td {border: 1px solid black;} p, .Normal {margin-bottom: 8pt;} h1 {} h1 {margin-bottom: 12pt;} h2 {font-family: 'Times New Roman'; font-weight: bold;} h2 {text-align: center;} h3 {} h3 {text-align: left;} h4 {font-style: italic;} h4 {} .Normal Table {table-layout: auto;} .Heading 1 Char {font-family: 'Times New Roman'; font-size: 12pt; font-weight: bold;} .Heading 2 Char {font-family: 'Times New Roman'; font-size: 12pt; font-weight: bold;} .Heading 3 Char {font-family: 'Times New Roman'; font-size: 12pt; font-weight: bold;} .Heading 4 Char {font-family: 'Times New Roman'; font-size: 12pt; font-weight: bold; font-style: italic;} .header {} .Header Char {font-family: 'Times New Roman'; font-size: 12pt;} .Title {font-family: 'Times New Roman'; font-size: 12pt; font-weight: bold;} .Title Char {font-family: 'Times New Roman'; font-size: 12pt; font-weight: bold;} .Table Grid {table-layout: auto; border-top-style: solid; border-top-width: 0.2pt; border-left-style: solid; border-left-width: 0.2pt; border-bottom-style: solid; border-bottom-width: 0.2pt; border-right-style: solid; border-right-width: 0.2pt;} .Revision {font-family: 'Times New Roman'; font-size: 12pt;} .Emphasis {font-style: italic;} .Normal (Web) {font-family: 'Times New Roman'; font-size: 12pt;} .footer {} .Footer Char {font-family: 'Times New Roman'; font-size: 12pt;} body > div + div {page-break-before: always;} div > *:first-child {page-break-before: auto;} @page page1 {size: A4 portrait; margin-right: 1in; margin-left: 1in; margin-top: 1in; margin-bottom: 1in; } @page page2 {size: A4 portrait; margin-right: 1in; margin-left: 1in; margin-top: 1in; margin-bottom: 1in; } Module Two Short Paper: International Trade Dennis Chen Southern New Hampshire University ECO 202: Macroeconomics Prof Dr. Casolari Jan 21st 2025 Introduction This short paper examines interdependence and the dynamics of international trade based on the following scenario: American and Japanese workers can each produce four cars per year. An American worker can produce 10 tons of grain per year, while a Japanese worker can produce 5 tons of grain per year. Production Possibility Frontier (PPF) Model For America to produce around four cars per year, there is a underlying requirement of 0.25 workers, in similar pattern, Japan also requires around 0.25 workers to produce four cars per year. Assessing the datasets, America tends to produce around 10 tone of grain every year, with a 1/10th demand on the workers need to sustain the same rate, while on the other hand, in Japan produces half of America’s produce, around 5 tons of grains and it will require on1/5th of workers to sustain the same rate. Workers Needed to Make One car One ton of grain U.S. ¼ or 0.25 1/10 or 0.1 Japan ¼ or 0.25 1/5 or 0.2 Table 1 The PPF graph tends to depicts possible maximum output combination of two goods, which a nation can produce considering the available/accessible resources at their stash; the point inside the PPF curve implies inefficiency, while the point outside the PPF curve are those that are unattainable with existing resources and lastly, those points on the PPF curve depict that the resources are utilized efficiently. Opportunity Costs For the United States, the opportunity cost of producing a car is 10/4 = 2.5 tons of grains given up. The opportunity cost of producing one ton of grain is 4/ 10 = 0.4 cars given up. Similarly, for Japan, the opportunity cost of producing the car is 5/4 = 1.25 tons of grains given up. The opportunity cost of producing one ton of grain IS 4/5 =0.8 cars given up. Opportunity Costs Of One car (in terms of tons of grain given up) One ton of grain (in terms of cars given up) U.S. 2.5 0.4 Japan 1.25 0.8 Table 2 Interdependence and Gains From Trade Observing the pattern in the datasets, Japan tends to have an upper hand in producing cars (more of a comparative advantage), wherein the opportunity cost is the sacrifice of 1.25 tons of grains for one car. Which not the case in the U.S. since it has the opportunity cost of 2.5 tons of grains for one care, implying that Japan has a lower opportunity cost proving its comparative advantage when it comes to producing cars. While the United State has a comparative edge in producing grains particularly because of the opportunity cost of 0.4 cars for 1 ton of grains, which is drastically lower than Japan’s opportunity cost of 0.8 cars for 1 ton of grains. For instance, out of 100 million workers around half will be utilized to produce cars and the rest will be redirected towards grain production. Assuming that the United State equipped itself to produce around 50 * 4 ~ 200 millions cars and around 50 * 10 ~ 500 tons of grains; similarly, if Japan equips it resources properly and utilizes human resources in an optimized manner, then similar results can be produced where 50 * 4 ~ 200 million cars and 50 * 5 ~ 250 tons of grains. Arguments for Trade According to the reports by Harrell (2024) in the article about U.S. Trade Agenda explores the benefits of embracing new trade agreements to favor free trade agreements by promoting economic growing internally yet sustaining globalization and also instill the scope for new job creation; these suggestions were made with an intent to reset the U.S. trade agenda to stimulate economic growth by fostering more open and beneficial trade relationships while also sustain competitive edge by encouraging domestic market to implement newer and innovative technologies. Harrell (2024) implies that when FTA’s are given ample amount of scope to operate it could bring diverse flow of talents, innovation and encourage specialization by engaging businesses in a healthier competition in an open market setting, such that there is a flow of competitively priced products and services both domestic and from other countries. By engaging in new FTAs, the article may note that American consumers stand to benefit from lower prices and greater access to a variety of goods (Harrell, 2024). FTAs reduce tariffs on imported goods, making products more affordable and increasing consumer choices. References Harrell, P. (2024, May 20). Time to Reset the U.S. Trade Agenda. Carnegieendowment.org. https://carnegieendowment.org/research/2024/05/time-to-reset-the-us-trade-agenda?lang=en Mankiw, N. G. (2024). Principles of economics (10th ed.). Cengage.More Articles From Macroeconomics
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