(A) Define the Concept of a Country's (Call It Country

question 13

Essay

(a) Define the concept of a country's (call it country A's) offer curve. Will this curve always be upward-sloping? Briefly, why or why not?
(b) Put country A's offer curve together with the offer curve of a trading partner country (call it country B) and indicate the equilibrium position. Then suppose that, from this equilibrium position, country A's consumers now change their tastes toward wanting relatively more of A's export good at the same time that country B reduces its tariff on A's export good. Explain the impact of each event separately on the volume of trade of each good and on the terms of trade. Then indicate whether it is possible to assess, when the new equilibrium position is attained, the net results of the two shifts together on the volume of trade of each good and on the terms of trade (in comparison with the initial equilibrium). (Assume that the offer curves are "elastic" throughout.)

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Definitions:

Labor-Hour

A measure of the amount of work or labor time required or used to produce a good or service.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead that should have been incurred based on the efficiency of operations.

Favorable

An accounting term referring to actual results being better than projected or budgeted figures, often used in the context of variances.

Unfavorable

A term often used in finance and accounting to describe a variance or outcome that leads to a worse financial position than expected.