This study source was downloaded by 100000861615843 from CourseHero com on 06 27 2024 16 22 48 GMT 05 00 https www coursehero com file 17183528 ECON 471 Homework 8 Marcus RobinsonID 924655888 Homework 8 ECON 471For the following questions please read Beer Fries and Globalization by Tim Harford this is Ch 9 of his book The Undercover Economist 1 In this chapter this author describes globalization in terms of trade in consumer goods Starbucks in Shanghai etc But does he feel that life will really become homogenized around the world 9 points No he does not believe that life will ever truly become homogenized around the world because there is always an influx of new ideas and culture everywhere As long as these new ideas and culture are mixed into the globe global society will never homogenize completely 2 This author describes comparative advantage in terms of authoring books by himself and the famed Harvard biologist E O Wilson Is this description consistent with how we described comparative advantage 9 points Yes in this even though E O Wilson has an absolute advantage in writing economics books his opportunity cost of writing a book in economics is higher than the author s This is due to the fact that E O Wilson could be using his time more productively by doing something else Therefore it is the same as described in class 3 According to this author can all of a country s production be eliminated by trade with another country 9 points No this cannot happen because there will always be efforts within a country to save the losers within a country and save domestic industries For example tariffs exist in order to ensure that domestic industries will not die at the hand of foreign industries This study source was downloaded by 100000861615843 from CourseHero com on 06 27 2024 16 22 48 GMT 05 00 https www coursehero com file 17183528 ECON 471 Homework 8 4 What is the author s view of sweatshops Do you find his arguments persuasive or not 9 points This author sees sweatshops as both a terrible place to work where conditions are awful pay is terrible and there are constant rights violations On the other hand the author also sees sweatshops as a place ofvoluntary jobs so it is better than not working in a sweatshop and a stepping stone to better things I agree with both of these views that the author presents For the following questions please read On Missing the Boat the Marginalization of the Bottom Billion in the World Economy by Paul Collier this is Ch 6 of his book The Bottom Billion As you can probably ascertain from the title the focus of this book is on the billion people living in the poorest countries in the world 5 What does the author mean by convergence Where has it occurred 9 points Convergence is when a country whose economy has escaped from the poverty trap catches up to developed economies This is because the poorer countries grow faster than the richer ones It is when the economies of countries converge to the same level of output This has happened in the European Union 6 Why are capital flows so stacked against the bottom billion 9 points They are stacked against the bottom billion because the bottom billion are in areas where there is often poor governance and policy and where the risk of investment is high This is a problem because there is adecent chance in these countries that your investment will be lost to the government to war or to a host of other things This keeps capital away from the bottom billion For the following question please read Comparative advantage The boomerang effect 7 How are economies of agglomeration described above in On Missing the Boat used in this article How is the use different than in On Missing the Boat 10 points Labor is only a small percentage of the cost of production of an item many other things go into it Industrial centers make it so that many of the other costs associated with producing a product decrease Producing in an industrial hub such as Silicon Valley or a Chinese Industrial town greatly reduces the price of production of a product due to the fact that inputs transportation and a whole host of other things are cheaper It is used similarly to the economics of agglomeration It differs because economics of agglomeration are that when many firms are producing manufactures in the same location it reduces cost for each firm This is due to the fact that all workers are trained and have similar skills and all the supporting industries are already present This causes all manufacturing to center around a few countries while other areas receive no manufacturing jobs This study source was downloaded by 100000861615843 from CourseHero com on 06 27 2024 16 22 48 GMT 05 00 https www coursehero com file 17183528 ECON 471 Homework 8 Powered by TCPDF www tcpdf org Please use this table for the following questions 8 What are the opportunity costs of producing an e book in both Taiwan and China 9 points The opportunity cost of creating an E book in China is 16 paperback books and in Taiwan it is 10 paperback books To find the opportunity cost divide the amount of e books by paperback books to find the cost of producing one E book per paperback book 9 What should each country specialize in 9 points Taiwan has a relative advantage in E books because it only costs them 10 paperback books to create oneE book while on the other hand it costs China 16 paperback books to create an E book Therefore Taiwan will specialize in E books and China will specialize in paperback books 10 Let s say that the terms of trade become 13 paperback books How does Taiwan benefit from before it trades 9 points This benefits both Taiwan and China as previously China had to pay 16 Paperback books for an E book and now China can receive and E book for only 13 paperback books Similarly Taiwan benefits because previously its E books were only worth 10 paperback books but now it can receive 13 paperback books for one E book Therefore both countries benefit 11 For the same terms of trade how does China benefit 9 points If terms of trade become 13 paperback books it will benefit China because before they had to pay 16 Paperback books for an E book and now China can receive and E book for only 13 paperback books Labor minutes per unit ofE Book Paperback BookTaiwan 200 20China 400 25