1. There are two countries, France and Belgium. There is one good, chocolate. The French supply of chocolate is given by P = Q + 5. The French demand for chocolate is given by P = 300 – 5Q. The Belgium supply of chocolate is given by P = Q. The Belgian demand for chocolate is given by P = 200 – 5Q. a. Calculate the autarkic equilibrium price of chocolate in both countries. Show your work. b. Which country has absolute advantage in chocolate production? Why? c. If the two countries begin to trade, what will the equilibrium price be? What is the quantity traded? Which country exports and which country imports? d. What are the changes in consumer and producer surplus in each country? e. Does each country gain from trade? How do you know? Does one country benefit more than the other from trade? If so, why? 2. There are two countries, Indonesia and Malaysia. There are two goods, computer chips and timber. There is one input, labor. The labor requirement for one unit of computer chips is 10 workers in Indonesia and 9 workers in Malaysia. The labor requirement for one unit of timber is 4 workers in Indonesia and 3 workers in Malaysia. a. What is the opportunity cost of a unit of timber in Indonesia? What is the opportunity cost of a unit of timber in Malaysia? b. Which country has a comparative advantage in timber? Why? c. Assume both countries have a labor force of 1000 workers. Draw each country’s production possibilities frontier. d. Assume each country has a demand diagonal with a slope of 1. Solve for the autarkic equilibrium quantities in both countries. Show your work. e. Assume that the trading price ratio (Ptimber/Pchips) is 4/11. Draw the trading line Indonesia’s graph and calculate the production combination and consumption combination for Indonesia at those prices. Does Indonesia gain from trade at those prices? Recall that Indonesia will completely specialize in the good in which it has comparative advantage. 3. There are two countries, Nigeria and Tanzania. There are two factors of production, labor and capital. There are two goods, software and pasta. Software is relatively capital intensive and pasta is relatively labor intensive. The labor force is Nigeria is about 80 million people. The labor force in Tanzania is 28 million people. The capital stock in Nigeria is 3.115 trillion dollars. The capital stock in Tanzania is 0.396 trillion dollars. According to the Heckscher-Ohlin model, which country will export software? Why? Show your work. 

4. In 2019 India exported $1.4 billion of aircraft parts. India’s total exports that year were $323.3 billion. In 2019 the U.S. exported $6.5 billion of aircraft parts. The U.S.’ total exports that year were $1644.3 billion. Worldwide aircraft parts exports were $88.5 billion in 2019, and worldwide total exports were $19000 billion. 

a. Calculate the Belassa index for India and the U.S. for aircraft parts.

b. Calculate the symmetrical index for both countries. 

c. According to your answers in part (b), which country has a comparative advantage in aircraft parts? If both have a comparative advantage in aircraft parts, which one has more of a comparative advantage? 5. Over ten million people born in Mexico live in the U.S. According to the model discussed in the textbook, how did that migration affect U.S.-Mexican trade? Explain your answer carefully. Refer to a diagram in the textbook if necessary. 6. According to the Gravity Model of international trade, should the U.S. trade more with Australia or with Colombia? Explain