【正文】 est of the solution is straightforward. Using X=S/n, output per firm is 41,666 units. Using the price equation, and the fact that c=5,000, yields an equilibrium price of $7,000.5. Evaluate the relative importance of economies of scale and parative advantage in causing the following:a. Most of the world’s aluminum is smelted in Norway or Canada.b. Half of the world’s large jet aircraft are assembled in Seattle.c. Most semiconductors are manufactured in either the United States or Japan.d. Most Scotch whiskey es from Scotland.e. Much of the world’s best wine es from France. a. The relatively few locations for production suggest external economies of scale in production. If these operations are large, there may also be large internal economies of scale in production.b. Since economies of scale are significant in airplane production, it tends to be done by a small number of (imperfectly petitive) firms at a limited number of locations. One such location is Seattle, where Boeing produces. c. Since external economies of scale are significant in semiconductor production, semiconductor industries tend to be concentrated in certain geographic locations. If, for some historical reason, a semiconductor is established in a specific location, the export of semiconductors by that country is due to economies of scale and not parative advantage. d. True scotch whiskey can only e from Scotland. The production of scotch whiskey requires a technique known to skilled distillers who are concentrated in the region. Also, 中華經(jīng)濟(jì)學(xué)習(xí)網(wǎng) 官方網(wǎng)站：圣才學(xué)習(xí)網(wǎng) 中華經(jīng)濟(jì)學(xué)習(xí)網(wǎng) 官方網(wǎng)站：圣才學(xué)習(xí)網(wǎng) soil and climactic conditions are favorable for grains used in local scotch production. This reflects parative advantage.e. France has a particular blend of climactic conditions and land that is difficult to reproduce elsewhere. This generates a parative advantage in wine production.6. There are some shops in Japan that sell Japanese goods imported back from the United States at a discount over the prices charged by other Japanese shops. How is this possible? The Japanese producers employ price discrimination across United States and Japanese markets, so that the goods sold in the United States are much cheaper than those sold in Japan. It may be profitable for other Japanese to purchase these goods in the United States, incur any tariffs and transportation costs, and resell the goods in Japan. Clearly, the price differential across markets may lead to such profitable chance.7. Consider a situation similar to that in Figure 69, in which two countries that can produce a good are subject to forwardfalling supply curves. In this case, however, suppose that the two countries have the same costs, so that their supply curves are identical.a. What would you expect to be the pattern of international specialization and trade?What would determine who produces the good? QP,CDACACExternal Economics and SpecializationQP,CDACACExternal Economics and SpecializationSuppose two countries that can produce a good are subject to forwardfalling supply curves and are identical countries with identical curves. If one country starts out as a producer of a good, . it has a head start even as a matter of historical accident, then all production will occur in that particular country and it will export to the rest of the world.b. What are the benefits of international trade in this case? Do they accrue only to the country that gets the industry? Consumers in both countries will pay a lower price for this good when external economies are maximized through trade and all production is located in a single market. In the present example, no single country has a natural cost advantage or is worse off than it would be under autarky.8. It is fairly mon for an industrial cluster to break up and for production to move to locations with lower wages when the technology of the industry is no longer rapidly improving—when it is no longer essential to have the absolutely most modern machinery, when the need for highly skilled workers has declined, and when being at the cutting edge of innovation conveys only a small advantage. Explain this tendency of industrial clusters to break up in terms of the theory of external economies.中華經(jīng)濟(jì)學(xué)習(xí)網(wǎng) 官方網(wǎng)站：圣才學(xué)習(xí)網(wǎng) 中華經(jīng)濟(jì)學(xué)習(xí)網(wǎng) 官方網(wǎng)站：圣才學(xué)習(xí)網(wǎng) External economies are important for firms as technology changes rapidly and as the “cutting edge” moves quickly with frequent innovations. As this process slows, manufacturing bees more normal and standard and there is less advantage brought by external economies. Instead, firms look for low cost production locations. Since external economies are no longer important, firms find little advantage in being clustered and it is likely that lowwage locations will be chosen.CHAPTER71. The marginal product of labor in Home is 10 and in Foreign is 18. Wages are higher in Foreign, so workers migrate there to the point where the marginal product in both Home and Foreign is equated. This occurs when there are 7 workers in each country, and the marginal product of labor in each country is 14. 2. There is no incentive to migrate when there is factor price equalization. This occurs when both countries produce both goods and when there are no barriers to trade (the problem assumes technology is the same in the two countries). A tariff by country A increases the relative price of the protected good in that country and lowers its relative price in the country B. If the protected good uses labor relatively intensively, the demand for labor in country A rises, as does the return to labor, and the return to labor in the country B falls. These results follow from the StolperSamuelson theory, which states that an increase in the price of a good raises the return