Canada and australia are (mainly) english speaking countries with populations that are not to different in size (canadas is 60 percent larger). but canadian trade is twice as large, relative to gdp, as australias. Why should this be the case ?
Canada and australia are (mainly) english speaking countries with populations that are not to different in size (canadas is 60 percent larger). but canadian trade is twice as large, relative to gdp, as australias. Why should this be the case ?
Related textbook solutions
Related questions
The following table provides data on the productivity of a single unit of a resource in producing clothing and cars in both Japan and Canada.
|
|
One Unit of Resource Produces either/or but not both |
|
|
|
Clothing (meters) |
Cars |
|
Japan |
6 |
2 |
|
Canada |
2 |
1 |
For simplicity, assume that these are the only two countries in the world, the production of each product in each country is subject to constant returns, and each country maintains full employment thanks to costless mobility of resources within the same country. Suppose Canada is endowed with 50 units of this all-purpose resource while Japan is endowed with 20 units. Answer the following questions. Justify your answers.
Suppose that, when trade between the two countries is not permissible, each country allocates half of its resource endowment to the production of one good.
a)If trade between the two countries is permissible. Which country would specialize in the production of clothing? Which country would specialize in the production of cars? Indicate the production points of each country in this case. What is the world total output of each product in this case?
