Essay A. (30 points) Suppose that two countries want to integrate their automotive
industries where firms (GM, Toyota, Ford, Audi and etc) are competitive
monopolists. We know that the average cost faced by each firm is described by AC =
Fn/S + c, where n represents the number of firms in the market, F represents the fixed
costs of production, S represents the total sales, and c represents the marginal cost. We
also know that equilibrium prices can be described by P = c + (500/n), where P represents
the price. Suppose that the total sales of cars in the Home country is 17,000,000, while in
the Foreign Market is 3,000,000. Notice that the marginal cost c is equal to $10,000, and
fixed cost F equals $100,000,000.00. Using this information answer the following
questions:
a) Find the price and number of firms in each market when the economies do not trade.
b) Find the price and the total number of firms in the integrated (free trade) market. What
are the sources of gains from trade in this case?
c) Explain the difference between the market equilibrium in letters “a” and “b” using
graphical analysis. Relate the distribution of gains from trade to the size of the
economies.
d) How do your answers in letters “a-c” relate to the North American Auto Pact of 1964
between the USA and Canada?
Essay B (20 points) Countries X and Y have two factors of production, capital and labor,
with which they produce two goods, M and A. Technology is the same in the two
countries. M is capital-intensive; X is labor-abundant. Analyze the effects on the terms of
trade and on the welfare of the two countries of an increase in X’s capital stock. Explain
your answer in detail, including statements on how the theorems from Chapter 5 were
used as part of your answer. Moreover, explain a possible relationship between your
answer and the China 2025 plan discussed during the online lecture.
Why Work with Us
Top Quality and Well-Researched Papers
We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.
Professional and Experienced Academic Writers
We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.
Free Unlimited Revisions
If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.
Prompt Delivery and 100% Money-Back-Guarantee
All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.
Original & Confidential
We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.
24/7 Customer Support
Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Our Services
No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.
Essays
No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.
Admissions
Admission Essays & Business Writing Help
An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.
Reviews
Editing Support
Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.
Reviews
Revision Support
If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.