Panel A of the graph shows the PPC for the UK before an improvement in technology (TT) and after an improvement in technology (TT'). The improvement is biased toward capital (K), which is used intensively in producing C. The offer curves for the UK and US are shown in Panel B. Before the improvement in technology the equilibrium at point B. After the improvement the UK wants to export a lot more C, and its offer curve shifts, showing the UK would like to be at point U. However, the increased output of C has the effect of reducing the RCPCW and the UK's terms of trade. This shifts the UK's offer curve to UK'. It is assumed that the US offer curve remains the same, so the new equilibrium after the improvement in technology is at R. This situation is reflected in the graph in Panel A, where the change in the TOT means that the highest CIC the UK can reach is VBefore the improvement in technology what is the output of C in the UK after specialisation and trade?

? What are the terms of trade before the improvement?

? How much C is exported before the improvement?

? How much C does the UK want to export after the improvement at the original terms of trade?

? What are the equilibrium TOT after the improvement?

? How much C and W does the UK trade after the improvement and resulting change in TOT?

? Does the US benefit from the improvement in technology in the UK, assuming it does not affect the PPC and CICs in the US?

I ? = | MIDTERM TEST SPRING 2020.docx - WordPad X File Home View Cut Calibri * 11 " A" A" $ . . Find Copy Gac Replace Paste B I U abe Xz X A . _. Picture Paint Date and Insert drawing time object Select all Clipboard Font Paragraph Insert Editing 3 . 1 . 2 . 1 . 1 . 1 . . . 1 . 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14 . 1 . 15 5 1 . 16 . 1 . 17 . 1 . 18 . W U.K.. PANEL A 160- PANEL B W 140- VII 120- 160 U 100- V 140 80- U.K. R -U.S. E 120 R III 100- 40 E 20 - T A 20 109 6207 807 100 120 140 160 C PB 10 N 20 M P 20 40 60 80 100 120 140 160 180 200 220 240 260 C Activate Windows Panel A of the graph above shows the PPC for the UK before an improvement in Go to Settings to activate Windows. 120% + 00:48 Type here to search O 93 6 1) ENG 03/03/2021