International trade, Strategic Management

Suppose that the small country of Fiji is isolated from the rest of the world and no international trade occurs due to prohibitively high transportation costs. Amongst other things, Fijians produce and consume coconuts and material (for making clothes) in perfectly competitive markets.
 
(a)  Illustrate the equilibrium autarky price and quantity of coconuts and material and the associated consumer and producer surpluses.   Suppose that transportation costs fall dramatically and that international trade is now commercially viable and that the Fijian government does not implement any trade restricting policies.  

(b)  Suppose that, the world price of coconuts (adjusted for the reduced transportation costs) is significantly higher than Fiji's autarky price.  Illustrate the new competitive equilibrium in Fiji's coconut market and identify: any exports or imports of coconuts; the new consumer and producer surpluses and the gains from international trade.  How would your answer change if Fiji produced a significant proportion of the world's coconuts (i.e. it was not "small" in this market)? 

(c)  Suppose that, the world price of material (adjusted for the reduced transportation costs) is significantly lower than Fiji's autarky price of material.  Illustrate the new competitive equilibrium in Fiji's material market and identify: any exports or imports of materials; the new consumer and producer surpluses and the gains from international trade.  

(d) Within Fiji, who gains and who losses from international trade in coconuts and materials and by how much?  (Refer to your charts in parts (b) and (c)).

Posted Date: 2/19/2013 3:02:34 AM | Location : United States







Related Discussions:- International trade, Assignment Help, Ask Question on International trade, Get Answer, Expert's Help, International trade Discussions

Write discussion on International trade
Your posts are moderated
Related Questions
Lukas Manufacturing is presently producing a tape holder that has a variable cost of $0.75 per unit and a selling price of $2.00 per unit.  Fixed costs are $20,000 a year.  Present

A good strategic plan is a dominant motivator for change and usual progress updates are crucial to maintain that momentum. The next steps then are to regularly ensure in on progres

After reading through the articles provided in your Assigned Reading and Research, Review one of the articles using the following format with the headings indicated in bold below:

Question 1: (i) In food production, the success of the operation depends on the Executive Chef and his various heads of sections in the main kitchen. What are these sections

QUESTION 1 Strategic Management is currently the core of business policy discipline everywhere (a) Define Strategic Management (b) Write short notes on the four important

Most executives are related with business planning. A business plan is typically written every year and includes things like a marketing plan, cash flow projections, a mission stat


Components of the cost of production Any sustained rise in input prices usually lead to an increase in productprices through the cascading effect. The major components of the c


QUESTION 1 Individuals at all levels are prone to resisting change. What are the five main reasons why individuals resist change? QUESTION 2 Research has identified six