Nama : MARISSA

NIM : 2301926030

1. Over the past few decades, East Asian economics have increased their share if world
GDP. Similarly, intra –East Asian trade-that is, trade among East Asian nations has
grown as share of world trade. More than that. East Asian Countries, do an increasing
share of trade with each other. Explain why using gravity model!

 Gravity model of international trade refers that bilateral trade between the
countries as a part of the international trade is inversely proportional to the
geographical distance. East Asia's trade grows faster than the rest of the world's,
increasing the East Asian trade ratio to the rest of the world's trade. In addition,
the ratio of East Asian GDP to global GDP rises. This is because they were
formerly poorer countries that need imports from wealthier countries; but, as
their economy grows, they will be able to manufacture the first imported goods
and trade them with the countries closest to them. This would result in an
increase in the GDP of East Asian countries while a reduction in the global GDP.
As a result, East Asian countries are gaining a larger share of global trade.

2. Home has 1.500 unit of labor available. It can produce two goods, oranges and
jackfruit. The unit labor requirement in oranges is 5, while jackfruit production it is 3.
(25%)
a. Graph Home’s Production Possibility Frontier!
b. What is opportunity cost of oranges in terms of jackfruit!

 A. Graph’s Home Production Possibility Frontier

.) 1500/5 = 300
This combination of 300 oranges and zero jackfruit is represented on the
vertical axis
as point A (the horizontal intercept)
.) 1500/3= 500
This combination of 500jackfruits and zero orange is represented on the
horizontal
axis as point B (the vertical intercept)
B. Home Jackfruits Production
500 P

F
Home Oranges Production
300
 The Production possibility frontier for Home is simply a straight line as there
is only one factor of production which is the labor.
 B. The unit labor requirement in Orange production is 5, while in Jackfruit
production it is 3. So, opportunity cost of apples in terms of Jackfruit:

Unit labor requirement in Orange Production = 5/3=1,667.

Unit labor requirement in Jackfruit Production

When the economy avoids producing orange, the labor used for producing it will
be utilized to produce or 1,667 jackfruit.

3. The world poorest countries cannot find anything to export. There is no resources that
is abundant, certainly not capital or land and in small poor nations not even labor is
abundant” why? Please explain!
 In my opinion, the poorest country in the world certainly has a large population.
When compared todeveloped countries such as the United States which also
have a large population, countries the poorest still won't find anything to export
because that is the most important thing not a country's absolute abundance but
its relative abundance. Poor country has a lot of manpower when compared to
the capital it owns. We suppose the comparison is the United States and
Guatemala. The United States has much land, capital, resources, and labor
compared to Guatemala while Guatemala does not have sufficient capital, only
labor. Guatemala may have a scarcity of capital, but the ratio of labor to capital
is likely to be much higher in Guatemala, meaning relatively more labor cheaper
in the country and more expensive capital. Even in a poor country the price of
labor work is cheaper, but this factor is not supported by the existing capital and
resources his country. This is what makes the poorest countries unable to find
resources anything to export.

4. Assume Indonesia and China are trading partners. Indonesia initially export palm oil
to and import lubricants from China. Using standards trade model, explain how an
increase in the relative price of palm oil, in relation to lubricants prices, would affect
production and consumption of palm oil for Indonesia (assuming price that the taste
for both goods in the same in both countries).If the income effect of price change of
pam oil is greater than substitution effect, what would happen to palm oil
consumption in Indonesia ?
 The standard trade model predicts that home country will increase domestic
welfare at the expense of the foreign country by impose import tariff. as an
example, Indonesia will increase the import tariff on material, so the
value of material will increase for Indonesian shoppers. Likewise, the
value of oil falls for Indonesian client. Indonesian producers can receive a lower
cost of oil, and thus they're going to be additional willing to
modify to material production, wherever the
provision of oil can decrease comparatively. Indonesian shoppers can
pay a lower cost for oil and thus are going to be additional caning to
modify to oil consumption; thence the demand for oil will increase. Besides, the
quality trade model conjointly predicts that the domestic welfare of home
country is also reduced by export grant. therefore if Indonesia imposes
a grant on oil exports, the value of oil can increase for Indonesian shoppers.
Indonesian producers can receive a better value of oil after they export, and
thus are going to be additional willing to modify to oil production, thence the
provision of oil can increase. Indonesian shoppers ought to pay a
better value of oil to producers, and thus they're going to switch
to material consumption, and demand for oil decrease.