Applies 0 45 90 135 180 h) Suppose that both countries are presently producing combination C. Fill in the blanks in the following table: Total output in millions of units: Barley Apples Rich Prosperous Total: both countries i) Now suppose that each country specializes in the product in which it has a comparative advantage. Show the results below: Total Output in millions of units: Barley Apples Rich Prosperous Total: both countries j) What is the joint gain from trade? (Value - 21 total marks) 2. (Similar to Basic Problem 1-5, p. 440) The following shows the maximum output levels for Here and There: Country Cloth Computers Here 50 metre Or 200 units There 60 metre Or 180 units a) What is the cost of 1 unit of cloth and a computer in Here? b) What is the cost of 1 unit of cloth and a computer in There? C) In what product does each country have a comparative advantage? d) What is the range of feasible terms of trade between the two counties? Value - 4 total marks)ECN 1020 -MACROECONOMICS Assignment #5 Chapter 10 1. (Similar to Comprehensive Problem, p. 438) Suppose that Rich and Prosperous have the output figures shown in Table 1. Table 1- Average Product per Worker Country Barley Apples Rich 6 bushels Or 3 barrels Prosperous 3 bushels Or barrels Assume that cost and productivity remain constant. a) What is the opportunity cost of producing one bushel of barley in Rich? b) What is the opportunity cost of producing one barrel of apples in Rich? c) What is the opportunity cost of producing one bushel of barley in Prosperous? d) What is the opportunity cost of producing 1 barrel of apples in Prosperous? e) In what product does Rich have a comparative advantage? f) In what product does Prosperous have a comparative advantage? g) Suppose that the labour force in each country is 20 million. Fill in the missing production possibilities data for both countries in Table 2. Table 2 Rich's Production Possibilities (in millions of units) B D E Barley 120 90 60 30 0 Apples Prosperous's Production Possibilities (in millions of units) B C D E BarleyChapter 11 3. (Like Comprehensive Problem, p. 481) Suppose that the international demand and supply of Canadian dollars (in billions) is as shown in Table 3. This represents that total market for Canadian dollars. a) See the following table: Table 3 Demand for Canadian Dollars Supply of Canadian Dollars Value of Exports Factor Foreign Total Imports Foreign Canadian Total Cdn $ in of Goods income Investment of Goods factor Investment US $ & Earned in Canada & income Abroad Services Abroad Services Paid Abroad $0.84 $110 $80 $180 $80 $66 $136 0.86 109 80 175 83 66 138 0.88 108 80 170 86 66 140 0.90 107 80 165 89 66 142 0.92 106 80 160 92 66 144 0.94 105 80 155 95 66 146 0.96 104 80 150 98 66 148 0.98 103 80 145 101 66 150 1.00 102 80 140 104 66 152 .02 101 80 135 107 66 154 1.04 100 80 130 110 66 156 b) What is the equilibrium value of the Canadian dollar? c) What is the value of its balance of trade? d) What is its current account balance? e) What is its Capital account balance? f) What is its overall balance of payments (current and capital accounts)? Now, suppose that Canada fixes its exchange rate against the U.S. dollar at a value of $1 Canadian equals $0.94 American. g) What is the value of its balance of trade? h) What is its current account balance? i) What is its capital account balance? j) What is the overall balance of payments (current and capital accounts)? k) What is the balance on its official settlements account? (Value - 25 total marks) Total Marks - 50 marks Due: End of day - Wednesday, April 10. 2024 (Final Exam will be on Wednesday, April 24, 2024. starting at 9 am)