Problems and Answers to Chapter 2
Q1: Canada and Australia are (mainly) English-speaking countries with populations that are not too different in size (Canada’s is 60 percent larger). But Canadian trade is twice as large, relative to GDP, as Australia’s. Why should this be the case?
加拿大和澳大利亚都是英语国家，两国的人口规模也相当（加拿大多60%），但是相对各自的GDP而言，加拿大的贸易额是澳大利亚的两倍，为什么如此？
A1:According to Gravity Model, GDP is not the only factor to explain the volume of trade between two countries, because distance is also an important factor. Considering the distance, the transportation cost of Australia is relatively higher than that of Canada, so the attractiveness of trade is reduced. However, Canada is close to the USA which is a large economy while Australia is not close to any large economy, making Canada more open while Australia is more autarky.
GDP 不是解释两国贸易量的唯一重要因素，距离也是至关重要的因素之一。 考虑到距离，澳大利亚的进出口运输成本相对更高，因此减少了贸易吸引力。 因为加拿大与美国相邻，而澳大利亚不与任何一个大经济体相邻，这使得加拿 大更加开放，而澳大利亚更加自给自足。
Q2:Mexico and Brazil have very different trading patterns. Mexico trades mainly with the United States, Brazil trades about equally with the United States and with the European Union; Mexico does much more trade relative to its GDP. Explain these differences using the gravity model.
墨西哥和巴西各自的贸易模式不同。墨西哥主要与美国贸易，巴西与美国和 欧盟的贸易量大致相当。墨西哥的贸易量相对其GDP而言很大。用引力模型 解释这种现象。
A2:Mexico is close to the United States, but is very far from the European Union, so Mexico’s value of trade with the United States is large. Brazil is far from both the United States and European Union, thus, Brazil’s volume of trade with the United States and with the European Union is generally equivalent. Mexico’s volume of trade is larger than Brazil’s, for two reasons: one is that Mexico is adjacent to the United States which is a large economy; the other is that Mexico is one of the members of NAFTA. Brazil is far from any large economy, and the size of the economy for the countries which have signed free trade agreements with Brazil is relatively small. 墨西哥与美国毗邻，但是距离欧盟很远，因此它与美国的贸易量很大。巴西 离美国和欧盟都很远，因此巴西与美国和欧盟的贸易量大致相当。墨西哥贸易 量比巴西大，其原因一方面由于墨西哥离大经济体美国近，另一方面由于它是 北美贸易协定的成员国之一。巴西远离任何一个大经济体，与它签订自由贸易 协定的国家经济规模都比较小。
Q3:Equation (2.1) says that trade between any two countries is proportional to the product of their GDPs. Does this mean that the GDP of every country in the world were to increase by 50%, world trade would increase by 125%? Analyze the question using the simple example shown in Table 2-2.
方程(2.1) 表明两个国家之间的贸易和它们的GDP乘积成正比。这是否意味着如果 每个国家的GDP增加50%, 世界的贸易量就增加125%？分析这个问题用表格2-2
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的简单例子。
A3:Yes. If both countries’GDP increase by 50%, other things equal, multiplying the right hand side of equation (2.1) by (1+50%)*(1+50%)=225% and multiplying the left
hand side of equation (2.1) by 1+125%=225%, therefore, the volume of trade will increase 125%. Using Table 2-2, if four countries’GDP all increase 50%, the volume of trade will increase
125% correspondingly, so the first line of the table will become: —1.6*225%=3.6 0.4*225% =0.9 0.4*225% =0.9 Country A’s GDP increases to 4*(1+50%) =6 > (3.6+0.9+0.9= 5.4). According to the assumption, the results are reasonable because the results mean that part of country A’s income is consumed on imports and part of country A’s income is consumed on domestic products, although the portion consumed domestically is smaller than that of imports.
是的。如果两个国家的GDP均增加50%，其他条件不变，方程(2.1) 的右边乘以(1+50%)*(1+50%)=225%, 方程式的左边乘以1+125%=225%，所以，世界的贸易量就增加125%。结合表格2-2，如果四个国家的GDP都增加50%倍，贸易量也增加125%，则表格第一行的数据应为：—1.6*225%=3.6 0.4*225% =0.9 0.4*225% =0.9 A国的GDP增加到4*(1+50%)=6 > (3.6+0.9+0.9= 5.4)。根据假设，这个结果是合理的因为这意味着A国的支出一部分从国外进口一部分收入用于消费本国的产品，虽然用于本国消费的部分少于对其他国家的进口。
Q4: Over the past few decades, East Asian economies have increased their share of world GDP. Similarly, intra-East Asian trade --- that is, trade among East Asian nations --- has grown as a share of world trade. More than that, East Asian countries 3 do an increasing share of their trade with each other. Explain why, using the gravity model.
在过去的几十年中，东亚国家增加了它们在世界GDP中的份额。同样，不 仅东亚国家整体的贸易在世界贸易中的份额增加了，而且东亚国家内相互间的 贸易也增加了。应用引力模型解释这一现象。 A4:
In the past, East Asian countries are all small economies, meaning that their size of economies is small and they are unable to import a lot of goods. As these East Asian countries become richer, the demand increases and they can import more than before. Considering that East Asian countries have been rich countries, they become trading partners with each other; however, they mainly imported goods from rich countries. Based on gravity model, even if the distance between South Korea and Taiwan is small, the volume of the two countries is very small due to their small size of economies. But now, because their GDP have increased, the volume of trade between the two countries increased correspondingly.
之前，东亚国家都是小经济体，这说明它们的市场规模很小，不能大量进口。随着它们越来越富裕，消费需求增加，它们也就能更多地进口了。这样，之前它们主要向富国出口，现在它们自己成为了富国，互相也就成为了贸易对象。根据引力模型，当韩国和台湾GDP 规模很小时，意味着尽管两国的距离很近，但是两国之间的贸易量很小。现在它们GDP增加了，它们之间的贸易量也随之增大了。
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Q5:A century ago, most French imports came from relatively distant locations: North America, Latin America, and Asia. Today, most French imports come from other European countries. How does this fit with the changing types of goods that make up world trade?
一个世纪以前，法国的进口产品来自相对遥远的地区：北美、拉丁美洲，和 亚洲。今天，法国绝大部分进口产品来自其他欧洲国家。这种变化是如何迎合 不断变化的世界贸易产品结构的？
A5:A century ago, each country’s trading products are determined by the country’ s climate and geography. The climate and natural resources endowments in French are very similar to that of other European countries; therefore, French can only import different products, such as, cotton, rubber, and etc, from other western hemisphere (North America, Latin America) and Asia. However, after industrial revolution, manufacturing trade increased dramatically. With the development of transportation and communicate technology, French’s trade volume with other European countries increases correspondingly, as the gravity model predicted directly.
一个世纪以前，各国贸易产品是由气候和地理条件决定的。法国的气候和自 然资源禀赋和欧洲其他国家很相似，这样法国只能从西半球其他国家、亚洲进 口像棉花、橡胶这样的产品，从欧洲其他国家进口产品很少。工业革命之后， 制造品贸易增长，并且随着交通和通讯的改进继续扩张，因此法国转向与欧洲 其他经济体大量开展贸易是自然而然的，这就是引力模型的一个直接预测。
Chapter 3
1．Home has 1200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. a．Graph out the production possibilities frontier:
Home's PPF
Qbanana 800600
400 2000
200400600800Qapple
b．What is the opportunity cost of apples in terms of bananas?
aLa?1.5 aLbc．In the absence of trade, what would the price of apples in terms of bananas be?
In the absence of trade, since labor is the only factor of production and supply decisions are
determined by the attempts of individuals to maximize their earnings in a competitive
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economy, only when Pa/Pb ? aLa/aLbwill both goods be produced. So Pa/Pb ? 1.5 在没有贸易时，因为劳方是唯一的生产要素，并且供应决定取决于个体尝试最大化他们的在竞争经济的收入，只有当两件物品将被生产。 因此
2．Home is as described in problem 1. There is now also another country, Foreign, with a
labor force of 800. Foreign’s unit labor requirement in apple production is 5, while in banana production it is 1.
a．Graph Foreign’s production possibilities frontier: Foreign's PPF Q*banana 1000800
600
400
200
0
Q*apple80160240320400
b．Construct the world relative supply curve.
3．Now suppose world relative demand takes the following form: Demand for apples/demand for bananas = price of bananas/price of apples.
a．Graph the relative demand curve along with the relative supply curve: Da/Db?Pb/Pa
DaQa?Q?aPa?1 ∵When the market achieves its equilibrium, we have ??() ?DbQb?QbPb∴RD is a hyperbola y?1 x精选
b．What is the equilibrium relative price of apples?
The equilibrium relative price of apples is determined by the intersection of the RD and RS
curves. RD: x?1 y?x?[0,0.5)? RS: ?x?0.5?x?(0.5,??]? ∴x?0.5 ∴Pa/Pb?2
eey?1.5y?[1.5,5] y?5y?2
c．Describe the pattern of trade. ∵P?a/P?b?Pea/Peb?Pa/Pb
∴In this two-country world, Home will specialize in the apple production, export apples and import bananas. Foreign will specialize in the banana production, export bananas and import apples.
d．Show that both Home and Foreign gain from trade.
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