Business in a Globalised Economy :Global value chains Assessment
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- Subject Code :
ECON1086
- Explain opportunity cost in words àhow would you explain this to someone in year 11 of high school? [Practice explaining things intuitively, you’ll need this at work].
- Using the concept of opportunity cost, explain comparative advantage.
- What is the opportunity cost of producing steel in each country?
- What is the opportunity cost of producing shirts in each country?
- Explain the concept of comparative advantage in these countries.
- What can you say about patterns of trade between these nations?
- Why? àhow would you explain this to someone in year 11 of high school? [Practice explaining things intuitively, you’ll need this at work].
- Suppose Country B offers to sell Country A two shirts in exchange for 2.5 kilograms of steel. Use this to illustrate the gains from trade.
- In Malawi, for every high school graduate there are 10 people that did not complete the sixth grade. If there are two types of goods electronics (high-skill labour intensive) and apparel (low-skill labour intensive), what is likely to be Malawi’s comparative advantage?In answering your question, consider the following:
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- What are endowments?
- How do endowments determine comparative advantage?
- Johnny says that comparative advantage no longer applies because 70% of global trade occurs in the GVC space. Explain GVC and why Johnny is wrong.
- GVCs allow countries to focus on a specific type of labour. Explain what the implications of this would be for wages of skilled and unskilled workers in that country.
- Given your answer to the question above, are GVCs good or bad for workers? [Discuss]
Refer to the discussions of Q5 above.
