Globalization and Trade Problem Set1

Use the following table to answer questions 1 through 12.

The table below describes production possibilities for Mexico and Nigeria. Each number in the
table shows the number of workers needed to produce one unit of the product.

Countr Shoe Glasse

y s s
Mexico 10 12
Nigeria 18 5

1. Suppose that both countries have 90 workers. What is the opportunity cost of producing Shoes
in Mexico?
__________ Glasses

2. Suppose that both countries have 90 workers. What is the opportunity cost of producing
Glasses in Mexico?
__________ Shoes

3. Suppose that both countries have 90 workers. What is the opportunity cost of producing Shoes
in Nigeria?
__________ Glasses

4. Suppose that both countries have 90 workers. What is the opportunity cost of producing
Glasses in Nigeria?
__________ Shoes

5. Suppose that both countries have 90 workers. Which country has an absolute advantage in
producing Shoes?
a. Nigeria
b. Neither country
c. Mexico

1
This assignment by Lumen Learning is licensed under a Creative Commons Attribution 4.0
International License. You can access an alternative means to plotting points at
https://www.desmos.com/calculator.
6. Suppose that both countries have 90 workers. Which country has an absolute advantage in
producing Glasses?
a. Nigeria
b. Neither country
c. Mexico

7. Suppose that both countries have 90 workers. Which country has a comparative advantage in
producing Glasses?
a. Nigeria
b. Neither country
c. Mexico

8. Suppose that both countries have 90 workers. Which country has a comparative advantage in
producing Shoes?
a. Nigeria
b. Neither country
c. Mexico

9. Suppose that both countries have 90 workers. Which country should be specializing in the
production of Glasses?
a. Nigeria
b. Neither country
c. Mexico

10. Suppose that both countries have 90 workers. Which country should be specializing in the
production of Shoes?
a. Nigeria
b. Neither country
c. Mexico

11. Suppose that both countries have 90 workers. Which country should be exporting Shoes?
a. Nigeria
b. Neither country
c. Mexico
12. Suppose that both countries have 90 workers. Which country should be exporting Glasses?
a. Nigeria
b. Neither country
c. Mexico

Use the following graph to answer questions 13 through 20.

The graph below shows the supply and demand curves and the world price for bagels.

13. What is the equilibrium price if this country does not trade?

14. What is the equilibrium quantity if this country does not trade?

15. What is the world price?

16. What is domestic quantity demanded at the world price?

17. What is the amount of the domestic supply at the world price?
18. At this world price, this country will
a. Import bagels
b. Neither import nor export
c. Export bagels

19. What is the amount of the imports at the world price?

20. What is the size of the gains from trade at the world price?