Question.2576 - Question #1: Comparative Advantage (30 points)Cars-unit labor hours Hats-unit labor hours Laos 9 3 France 1 2 The above table illustrates the unit labor requirements in hours for cars and hats for Laos and France. Assume, as we did in class, that only labor matters in production, and that only demand drives opportunity costs which in turn drive relative prices. Also, assume that all revenues are paid out as wages. A. Does Laos have an absolute advantage in production? If so, in which industries does it have an absolute advantage? (3 points)B. Where does Laos have comparative advantage? (2 points)C. Does France have an absolute advantage in production? If so, in which industries does it have an absolute advantage? (3 points)D. Where does France have comparative advantage? (2 points)E. What is the ratio of unit labor hours/opportunity cost of cars in terms of hats for Laos? (3 points)F. What is the ratio of unit labor hours/opportunity cost of cars in terms of hats for France? (3 points)MBA 7063 World Economy online fall 2022 Final Examination2 G. What is the price range in which the international trading price of cars to hats may be found? (4 points)Now assume that the international trading price of cars to hats is 1; i.e. one car can be traded for one hat, and that trade occurs. H. Show how both Laos and France can benefit from trade. Be specific, using the table above. Please assume that each country has only 1 hour of unit labor as an endowment for your calculations. (5 points)I. What is the ratio of wage rates between the two countries? What are the ratios of productivity between the two countries? (5 points)MBA 7063 World Economy online fall 2022 Final Examination3Question #2: Tariffs (20 points)Importing CountrySDA. Identify the consumer loss using the letters in the above graph. What is the amount of this loss? (5 points)B. Identify the producer gain using the letters in the above graph. What is the amount of this gain? (5 points)C. Identify the government revenue using the letters in the above graph. What is the amount of this revenue? (5 points)D. What is the net cost/(gain) of this tariff? Write the equation using the letters above and solve it. (5 points) P25 P T *S 2 D 2 Qa c b e dS 1 D 135 P T 30 P w200 300 500 600MBA 7063 World Economy online fall 2022 Final Examination4 Question #3 Exchange rates (20 points) Using the following information, answer the problems below. Each part is independent of one another, i.e. b) is not related to d) State your answers to four decimal places. The below rates are created, not actual rates, so that the problem will work. Spot rates of the US Dollar on December 7, 2022 Argentine Peso (ARG) to US Dollar (USD): 96.9738 US Dollar (USD) to Euro (EUR): 1.1735 Expected annual inflation rates for the year ending December 7, 2023: USA: 1.0%, Argentina: 10.0%, Eurozone: 4.5% Expected annual interest rates for the year ending December 7, 2023: USA: 2.5%, Argentina: 11.0%, Eurozone: 5.5% a) What is the USD/ARG spot rate on December 7, 2022? (2 points) What is the ARG/EUR spot rate on December 7, 2022? (3 points)b) If a currency forecaster predicted that the Argentine peso would appreciate by 15% against the US dollar by this time next year, what would you expect the ARG/USD rate to be on December 7, 2023? (5 points)c) Assume that purchasing power parity holds. What would you expect the USD/EUR rate to be on December 7, 2023? (5 points)d) Assume that interest rate parity holds. What would you expect the ARG/USD rate to be on December 7, 2023? (5 points)MBA 7063 World Economy online fall 2022 Final Examination5Questions/Problems 4-7 on the Excel spreadsheet. Question #8 Essay Question: What is political risk? Give examples, and show how political risk might be categorized as other, associated country-level risks. How do firms mitigate political and associated risks?
Answer Below:
Question xxxxxxxxxxx Advantage xxxxxx Cars-unit xxxxx hours xxxxxxxxx labor xxxxx Laos xxxxxx The xxxxx table xxxxxxxxxxx the xxxx labor xxxxxxxxxxxx in xxxxx for xxxx and xxxx for xxxx and xxxxxx Assume xx we xxx in xxxxx that xxxx labor xxxxxxx in xxxxxxxxxx and xxxx only xxxxxx drives xxxxxxxxxxx costs xxxxx in xxxx drive xxxxxxxx prices xxxx assume xxxx all xxxxxxxx are xxxx out xx wages x Does xxxx have xx absolute xxxxxxxxx in xxxxxxxxxx If xx in xxxxx industries xxxx it xxxx an xxxxxxxx advantage xxxxxx Yes xxxx has xx absolute xxxxxxxxx in xxxxxxxxxx Laos xxxx an xxxxxxxx advantage xx Hats xxxxxxxx B xxxxx does xxxx have xxxxxxxxxxx advantage xxxxxx Laos xxx comparative xxxxxxxxx in xxxx industry x Does xxxxxx have xx absolute xxxxxxxxx in xxxxxxxxxx If xx in xxxxx industries xxxx it xxxx an xxxxxxxx advantage xxxxxx Yes xxxxxx has xx absolute xxxxxxxxx in xxxxxxxxxx France xxx an xxxxxxxx advantage xx Cars x Where xxxx France xxxx comparative xxxxxxxxx points xxxxxx has x comparative xxxxxxxxx in xxx rsquo x industry x What xx the xxxxx of xxxx labor xxxxx opportunity xxxx of xxxx in xxxxx of xxxx for xxxx points xxx World xxxxxxx online xxxx Final xxxxxxxxxxx hours xx the xxxxx of xxxx labor xxxxx opportunity xxxx of xxxx in xxxxx of xxxx for xxxx F xxxx is xxx ratio xx unit xxxxx hours xxxxxxxxxxx cost xx cars xx terms xx hats xxx France xxxxxx hours xx the xxxxx of xxxx labor xxxx opportunity xxxx of xxxx in xxxxx of xxxx for xxxxxx G xxxx is xxx price xxxxx in xxxxx the xxxxxxxxxxxxx trading xxxxx of xxxx to xxxx may xx found xxxxxx is xxx price xxxxx of xxxxxxxxxxxxx trading xxxxx of xxxx to xxxx may xx found xxx assume xxxx the xxxxxxxxxxxxx trading xxxxx of xxxx to xxxx is x e xxx car xxx be xxxxxx for xxx hat xxx that xxxxx occurs x Show xxx both xxxx and xxxxxx can xxxxxxx from xxxxx Be xxxxxxxx using xxx table xxxxx Please xxxxxx that xxxx country xxx only xxxx of xxxx labor xx an xxxxxxxxx for xxxx calculations xxxxxx Comparative xxxxxxxxx refers xx a xxxxxxx amp x ability xx produce xxxxx and xxxxxxxx at x lower xxxx than xxxxxx else xx often xxxxxx when x country xxxxxxxx something xx a xxxxx cost xxxx you xxxxx produce xx in xxxx own xxxxxxx Absolute xxxxxxxxx is xxx ability xx an xxxxxxxxxx company xxxxxx or xxxxxxx to xxxxxxx a xxxxxxx quantity xx a xxxx or xxxxxxx with xxx same xxxxxxxx of xxxxxx per xxxx of xxxx or xx produce xxx same xxxxxxxx of x good xx service xxx unit xx time xxxxx a xxxxxx quantity xx inputs xxxx its xxxxxxxxxxxxxx World xxxxxxx online xxxx Final xxxxxxxxxxx I xxxx is xxx ratio xx wage xxxxx between xxx two xxxxxxxxx What xxx the xxxxxx of xxxxxxxxxxxx between xxx two xxxxxxxxx points xxxxxxxx Tariffs xxxxxx Importing xxxxxxxxxx Identify xxx consumer xxxx using xxx letters xx the xxxxx graph xxxx is xxx amount xx this xxxx points x P x S x Qa x b x dS x P x P x MBA xxxxx Economy xxxxxx fall xxxxx Examination x Identify xxx producer xxxx using xxx letters xx the xxxxx graph xxxx is xxx amount xx this xxxx points x Identify xxx government xxxxxxx using xxx letters xx the xxxxx graph xxxx is xxx amount xx this xxxxxxx points x What xx the xxx cost xxxx of xxxx tariff xxxxx the xxxxxxxx using xxx letters xxxxx and xxxxx it xxxxxx Question xxxxxxxx rates xxxxxx Using xxx following xxxxxxxxxxx answer xxx problems xxxxx Each xxxx is xxxxxxxxxxx of xxx another x e x is xxx related xx d xxxxx your xxxxxxx to xxxx decimal xxxxxx The xxxxx rates xxx created xxx actual xxxxx so xxxx the xxxxxxx will xxxx Spot xxxxx of xxx US xxxxxx on xxxxxxxx Argentine xxxx ARG xx US xxxxxx USD xx Dollar xxx to xxxx EUR xxxxxxxx annual xxxxxxxxx rates xxx the xxxx ending xxxxxxxx USA xxxxxxxxx Eurozone xxxxxxxx annual xxxxxxxx rates xxx the xxxx ending xxxxxxxx USA xxxxxxxxx Eurozone x What xx the xxx ARG xxxx rate xx December xxxxxx What xx the xxx EUR xxxx rate xx December xxxxxx b xx a xxxxxxxx forecaster xxxxxxxxx that xxx Argentine xxxx would xxxxxxxxxx by xxxxxxx the xx dollar xx this xxxx next xxxx what xxxxx you xxxxxx the xxx USD xxxx to xx on xxxxxxxx points xxx World xxxxxxx online xxxx Final xxxxxxxxxxx c xxxxxx that xxxxxxxxxx power xxxxxx holds xxxx would xxx expect xxx USD xxx rate xx be xx December xxxxxx d xxxxxx that xxxxxxxx rate xxxxxx holds xxxx would xxx expect xxx ARG xxx rate xx be xx December xxxxxx Questions xxxxxxxx - xx the xxxxx spreadsheet xxxxxxxx Essay xxxxxxxx What xx political xxxx Give xxxxxxxx and xxxx how xxxxxxxxx risk xxxxx be xxxxxxxxxxx as xxxxx associated xxxxxxxxxxxxx risks xxx do xxxxx mitigate xxxxxxxxx and xxxxxxxxxx risks xxxxxxxxx risk xx the xxxxxxxxxxx that x country xxx s xxxxxxxxx unrest xx changes xxxxx have x negative xxxxxx on xx investment xxx s xxxxxxx A xxxxxx in xxx executive xxxxxxxx legislative xx military xxxxxxxx of xxxxxxxxxx could xxxxx instability xxxx would xxxx an xxxxxx on xxxxxxxxxx returns xxxxxxxxx risk xxxxxxxx referred xx as xxx quot xxxxxxxxxxxx risk xxx quot xxxxxxxxx in xxxxxxxxxx as xxx investment xxxx horizon xxxxxxxxx They xxx regarded xx a xxxxxxxx kind xx jurisdiction xxxx Along xxxx market-related xxxxxxxxxxxxxx political xxxxxxxxx can xxxx an xxxxxx on xxxxxxxxxxx Numerous xxxxxxxxx made xx governments xxxx the xxxxxxxxx to xxxx an xxxxxx on xxxxxxxx companies xxxxxxx and xxx broader xxxxxxx Taxes xxxxxxxx regulations xxxxxxxx valuation xxxxx tariffs xxxxx rules xxxxxxxxx the xxxxxxx wage xxx environmental xxxxxxxxxxxx are x few xx these xxxx if xxxx suggested xxx legislation xxx have xx effect xxx tiers xx government xxxxxxxxx the xxxxxxx state xxx local xx well xx other xxxxxxx have xxx authority xx enact xxxxxxxxxxx For xxxxxxx In xxx operating xxxx part xx its xx filing xxx the xxxxxx with xxx SEC xxxxxxxx Stores xxx listed xxxxxxx political xxxxx it xxxxxxxxx Wal-Mart xxxxxx potential xxxxxxxxx and xxxxxxxx instability xx the xxxxxxx where xxx international xxxxxxxxx operate xxxxx issues xxxxxxxxx trade xxxxxxxx and xxxxxxx as xxxx as xxxxx problems xx its xxxx of xxxxx related xx suppliers xxx company xxxxxxxxx the xxxxxxxx World xxxxxxx online xxxx Final xxxxxxxxxxx related xx legislative xxxxxxxx regulatory xxx political xxxxxxxx hazards xx its xxxxxxx on xxxxxxxxxx compliance xxxxxxxxxxxx and xxxxx risks xxxxxxxxx instability xxxxx and xxxxxxxxxx restrictions xxxxxxxx product xxxxxx and xxxxxxxxxxxxx rules xxx and xxxxx laws xxxxx policies xxx monetary xxxxxxxxxxxx are xxxxx the xxxx factors xxxxxx The xxxx ways xx reduce xxxxxxxxx risks xxxxxxx It xx important xx have x risk xxxxxxxx which xxxxx to xx done xxxxxx connections xxxx local xxxxxxxxxxxxx will xxxx a xxxxxxx to xxxxxxxxxx the xxxxxxxxxx While xxxxxxxxxx insurance xxxx also xxxx in xxxxxxxxxx political xxxxxMore Articles From Finance
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