SIM UOL August 2012 Intake

[czykent91]

For the tut qns 2 for specialisation and trade, is it true or false?? It states that the international price of 1 unit of x is 1 unit of y and that economy 1 must have exact 2 billion units of y, therefore both economies will consume the same amt of x and y as each other. But according to what i work out, economy 1 has comparative advantage in producing x while economy 2 has comparative advantage in producing y.

Thus, economy 1 should concentrate on producing x while economy 2 should concentrate on producing y. Then how do i go on from here? Can anyone help?? Got stuck at this qns.

You are right. Economy 1 have CA in producing X & Economy 2 have CA in producing Y.

Thus after specialisation alone, Total X&Y in Economy is 4B of X and 4B of Y respectively.

It also states that Economy 1 must have exactly 2 billions of Y, thus, Economy 1 must trade away 2 billions of the X it produces to gain 2 billions of Y. Economy 1 is the buyer this time.

Economy 2 have to ask for 2 billions of X from Economy 1 in order to sell 2 billions of the Y it produces to Economy 1.

So in the end, after specialisation & trade...

Economy 1 & 2 each will end up with 2B of X and 2B of Y each respectively.

Thus the statement is True.

Hope this helps

 

[chiwawa23]

You are right. Economy 1 have CA in producing X & Economy 2 have CA in producing Y.

Thus after specialisation alone, Total X&Y in Economy is 4B of X and 3B of Y respectively.

It also states that Economy 1 must have exactly 2 billions of Y, thus, Economy 1 must trade away 2 billions of the X it produces to gain 2 billions of Y. Economy 1 is the buyer this time.

Economy 2 have to ask for 2 billions of X from Economy 1 in order to sell 2 billions of the Y it produces to Economy 1.

So in the end, after specialisation & trade...

Economy 1 & 2 each will end up with 2B of X and 2B of Y each respectively.

Thus the statement is True.

Hope this helps

How u get the total 4B of X and 3B of Y respectively??

 

[czykent91]

How u get the total 4B of X and 3B of Y respectively??

Paiseh paiseh, is 4B of X and 4B of Y...haha

 

[chiwawa23]

Paiseh paiseh, is 4B of X and 4B of Y...haha

Oh ok, can, thanks man, think your econs is really good. Gotta need your help then ah.

 

[ahnic89]

Just saw reply from sim..saying that my application have been sent and is now in process..ask me kindly wait for the email from uol..~.~

 

[Deadpool.]

haha, pm me anytime

btw, are u a bro or a sister?

Don't let the nick and avatar deceive you, he's a guy.

 

[czykent91]

Don't let the nick and avatar deceive you, he's a guy.

Hong Kan! I guess as much

 

[ff8squall]

Can anyone help with tut qns 1?? Got stuck. Drawn out the graphs for both economies 1 & 2. Both economies 1 & 2 got 20 units of x. But their units of y differ, economy 1 has 80 units of y and economy 2 has 40 units of y. So is there trade?? Cos for x both economies no need to trade as both are at sufficient and Autarky. But then for y is it trade 20 units?? If so, is it that there are no price exist which economy 1 will gain from trading with economy 2??

Just curious, do we have to draw a new ppf to show that there exists a price whereby the new ppf is above the original ppf between the price range of 2-4 (the opp cost of production of x)

 

[ff8squall]

Don't let the nick and avatar deceive you, he's a guy.

Rule of thumb, forumers who use female avatars are males.

 

[chiwawa23]

Don't let the nick and avatar deceive you, he's a guy.

Lol. U should have let him make a guess 1st ah before exposing.

 

[chiwawa23]

Hong Kan! I guess as much

How about u? U a bro or sis? But looking at your username, I guess should be bro ah.

 

[chiwawa23]

Just curious, do we have to draw a new ppf to show that there exists a price whereby the new ppf is above the original ppf between the price range of 2-4 (the opp cost of production of x)

Yea. Need to draw out the new ppf.

 

[INVS 2.0]

Of Coz there's trade...
Econo1 have to sacri 4units of Y to make 1 X, while Econo2 only have to sacri 2units of Y to make 1 X.
Thus, Econo1 only have to sacri 1/4 units of X to make 1 Y, while Econo2 needs to sacri 1/2 units of X to make 1 Y.

We can conclude that:
Econo 1 have comparative advantage over Econo2 in producing Y.
Econo 2 have comparative advantage over Econo1 in producing X.

Thus so, Econo 1 should concentrate on producing Y and Econo 2 should concentrate on producing X.

So, to facilitate trade and exchange:
The price of a good must be less than the buyer's OC, but greater than the OC to the seller.

Buyer here would be Econo 1 whose OC would be 4 units of Y per unit of X.
Seller here would be Econo 2 whose OC would be 2 units of Y per unit of X.

EDIT: For Autarky(Self Sufficiency), it means that the economies are producing and consuming in a productively efficient manner; they produces at their respective PPF and holds and appropriate level of both goods.
(E.g Econo1 is producing and consuming at 10X and 40Y before trading and specialisation.)

Hope this helps

wah, you really followed the lecture note point forms step-by-step to get the conclusion.

 

[INVS 2.0]

Just got my appeal successful, now back to 100.0% again. But only for this time.

Don't forget to tap your student card, else you have to go student services to get an attendance form for your lecturer to endorse on the day itself. Very troublesome.

 

[INVS 2.0]

Rule of thumb, forumers who use female avatars are males.

including you.

But it seems like in this thread, only males are talking. Where are the ladies?

 

[czykent91]

nah beh... tot where got guy call himself chiwawa

Actually everything is learn from the lect 1 mah... dun rush to take notes just listen to everything he say and try not to talk to anyone or u kenna sidetracked and ur time in the lect is wasted...

 

[ff8squall]

including you.

But it seems like in this thread, only males are talking. Where are the ladies?

Probably lurking somewhere?

 

[INVS 2.0]

Btw, for econs tomorrow, apart from the Economy 1 and 2 questions, anymore? I think there should be 2 questions on the budget line?

 

[trueeyesonme]

hey ahnic89, have u receive email from the UOL？

 

[ahnic89]

hey ahnic89, have u receive email from the UOL？

Nope..nt yet..hw abt u??