Chapter 6 Scale Economies, Imperfect Competition, and Trade 119 11. Here are dat
ID: 1212171 • Letter: C
Question
Chapter 6 Scale Economies, Imperfect Competition, and Trade 119 11. Here are data on Japanese exports and imports, for 2009, for the same seven products shown for U.S. trade in Figure 6.2: Japanese Japanese Exports (S millions) Imports Product Perfumes (55310) Cosmetics (55320) Household clothes washing machines (77511) Electronic microcircuits (77640) Automobiles (78120) Large civilian aircraft (79240) Photographic cameras (88111) (S millions) 968 15 24,381 62,146 0 12 223 919 618 16,238 4,576 2,991 35 a. For each product for Japan, calculate the IIT share. b. The weighted average of IIT shares for these seven products for 2009 for the United States (using the data from Figure 6.2) is 54.5 percent. For Japan for these seven products for 2009, what is the weighted average of the IIT shares? Which country c. Japan is an importer of large civilian aircraft. What economic theory or concept 12. You are an adviser to the Indian government. Until now, government policy in India has relatively more IIT in these seven products? best explains this aspect of Japan's trade? has been to severely limit imports into India, resulting also in a low level of Indian a. What are the three strongest arguments that you can offer to the Indian government b. Which groups in India will be the supporters of the policy shift toward freer trade? exports. The government is considering a policy shift to much freer trade. about why the policy shift to freer trade is desirable for India? Which groups will be the opponents?Explanation / Answer
11 a)
IIT share(%) (5/3 *100)
c) The concept of economies of scale and difference in technological abilities explains Japan's export of civilian aircrafts.
12 a) Free trade is desirable for india because
1) it will bring wide variety of products to India, increasing consumer choice.
2) It will bring cheap products from rest of the world thus bringing in competition for producers and improving the quality of products.
3) larger market for home producers.
b) importers and consumers will favour free trade
big industrialist who are protected against free trade will oppose it.
1 2 3 4 5 6 product export(X) imports(M) total trade (X+M) net trade (X-M) intra idustry trade(3-|4|)IIT share(%) (5/3 *100)
perfumes 2 223 225 -221 4 1.78 cosmetics 968 919 1887 49 1838 97.4 households clothes 15 618 633 -603 30 4.74 electronic circuit 24381 16238 40619 8143 32476 79.95 automobiles 62416 4576 66992 57840 9152 13.67 aircraft 0 2991 2991 -2991 0 0 camera 12 35 47 -23 24 51.06