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Chapter 19: Q 26. (page 462)

In World Trade Organization meetings, what do

you think low-income countries lobby for?

Short Answer

Expert verified

Low-income countries lobby might lobby for fewer trade barriers

Step by step solution

01

Step 1. Definition

Lobbying is a venture/effort by individuals or interest groups to impact the decisions of government. Lobbying is predetermined in any political system.

02

Step 2. Explanation

This is so because if they have fewer trade barriers then they would get more trade and in turn, make a profit for themselves and their people.

Low-income countries benefit more from the decision of fewer trade barriers than their counterparts that are high-income countries because low-income countries do have not a big internal market from where they make gains. Moreover, smaller economies often have fewer competitive firms making goods within their economy.

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Most popular questions from this chapter

Why does the United States not have an absolute

advantage in coffee?

If trade increases world GDP by 1% per year, what is the global impact of this increase over 10 years? How does this increase compare to the annual GDP of a country like Sri Lanka? Discuss. Hint: To answer this question, here are steps you may want to consider. Go to the World Development Indicators (online) published by the World Bank. Find the current level of World GDP in constant international dollars. Also, find the GDP of Sri Lanka in constant international dollars. Once you have these two numbers, compute the amount the additional increase in global incomes due to trade and compare that number to Sri Lanka’s GDP.

In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios.

a. Who has the absolute advantage in the production of rubber or radios? How can you tell?

b. Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine.) Which country has a comparative advantage in the production of radios?

c. Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber?

d. In this example, does each country have an absolute advantage and a comparative advantage in the same good?

e. In what product should Japan specialize? In what product should Malaysia specialize?

Why might intra-industry trade seem surprising

from the point of view of comparative advantage?

Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef in Brazil? What is the opportunity cost of producing one pound of beef in the United States?
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