Answer Happy

QUESTION 1 [65 MARKS] The table below shows the U.S. supply and
demand schedule for honey from U.S. producers. At the same time,
the average world price of honey is $8
Price of Honey
Quantity Demand
Quantity Supplied
5
10
0
6
8
3
7
6
6
8
4
9
9
2
12
10
0
15
1.1 With no international trade, what is the price of honey and
the quantity bought and sold in the United States? (10)
1.2 Does the United States have a comparative advantage in
producing honey, and with free international trade, does the United
States export or import honey? (15)
1.3 With free international trade, what is: a) the U.S. price of
honey; b) the quantity bought by Americans; c) the quantity
produced in the United States; and d) the quantity of honey
exported or imported? (20)
1.4 Critically compare the notions of absolute and relative
(comparative) advantage for a country, using your own examples.
Argue whether or not the Americans gain from international trade in
honey. If yes, do all Americans gain? If not, who loses? Overall,
do the gains exceed the losses?