Archives: Solution Manual

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 6: PROCUREMENT 6-1. What is procurement? What is its relevance to logistics? Procurement refers to the raw materials, component parts, and supplies bought from outside organizations to support a company’s operations. It is […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 5: THE SUPPLY CHAIN MANAGEMENT CONCEPT 5-1. Discuss the differences between a supply chain and supply chain management. A supply chain can be viewed as a combination of processes, functions, activities, relationships, and […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 4: ORGANIZATIONAL AND MANGERIAL ISSUES IN LOGISTICS 4-1. Discuss several issues that influence the organization of logistics activities within a firm. The organization of logistics activities within a firm depends on a number […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 3: STRATEGIC AND FINANCIAL LOGISTICS 3-1. Discuss the differences between corporate level, business unit level, and functional level strategies. Corporate-level strategy is focused on determining the goals for the company, the types of […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 2: LOGISTICS AND INFORMATION TECHNOLOGY 2-1. In what ways can information be helpful in logistics and supply chain management? There are a number of ways in which information can be helpful in logistics […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 14: INTERNATIONAL LOGISTICS 14-1. Discuss some of the key political restrictions on cross-border trade. Political restrictions on cross-border trade can take a variety of forms. Many nations ban certain types of shipments that […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 13: TRANSPORTATION MANAGEMENT 13-1. How has globalization impacted the transportation manager’s job? The text cites the People’s Republic of China as an example of globalization’s impact on the transportation manager’s job. In particular, […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 12: TRANSPORTATION 12-1. Why is transportation important to a firm’s supply chain operations? Transportation influences, or is influenced by, many logistics activities such as the fact that transportation costs are directly affected by […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 11: PACKAGING AND MATERIALS HANDLING 11-1. How do product characteristics influence packaging and materials handling considerations? One consideration is a product’s physical characteristics. Substances exist in three forms—solid, liquid, gas—and each form has […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 10: WAREHOUSING MANAGEMENT 10-1. Why does warehousing exist in a supply chain? A key reason for warehousing is because patterns of production and consumption do not coincide and warehousing serves to match different […]

PART II ANSWERS TO END-OF-CHAPTER QUESTIONS CHAPTER 1: AN OVERVIEW OF LOGISTICS 1-1. Did it surprise you that logistics has such an important economic impact? Why or why not? The answer to this question likely depends on the student’s prior […]

Contents Chapter 1 Introduction 1 Overview of Section I: International Trade Theory 3 Chapter 2 World Trade: An Overview 5 Chapter 3 Labor Productivity and Comparative Advantage: The Ricardian Model 8 Chapter 4 Specific Factors and Income Distribution 12 Chapter […]

nAnswers to Textbook Problems  1. The import demand equation, MD, is found by subtracting the home supply equation from the Home 2. a. Foreign’s export supply curve, XS, is XS  40  40  P. In the absence of […]

42  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Overview of Section II: International Trade Policy Section II of the text consists of four chapters: Chapter 9 The Instruments of Trade Policy   Chapter 10 The Political Economy of Trade Policy   […]

n Answers to Textbook Problems 1. With internal economies of scale, there is imperfect competition and firms set marginal revenue equal to marginal cost. Unlike the case of perfectly competitive markets, under monopoly marginal revenue 2. To solve this problem, we […]

Chapter 8 Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises    35 Chapter 8 Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises .1  Chapter Organization The Theory of Imperfect Competition   Monopoly: A Brief Review   Monopolistic […]

1. Cases a and d reflect external economies of scale since concentration of the production of an industry in a few locations reduces the industry’s costs even when the scale of operation of individual firms remains small. External economies need […]

30  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 7 External Economies of Scale and the International Location of Production .1  Chapter Organization Economies of Scale and International Trade: An Overview Economies of Scale and Market Structure The Theory […]

1. 2. In panel a, the reduction of Norway’s production possibilities away from fish cause the production of fish relative to automobiles to fall. Thus, despite the higher relative price of fish exports, Norway moves down to a lower indifference […]

24  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 6 The Standard Trade Model .1  Chapter Organization A Standard Model of a Trading Economy   Production Possibilities and Relative Supply   Relative Prices and Demand   The Welfare Effect of Changes in […]

nAnswers to Textbook Problems  1. a. The first step is to compute the opportunity cost of both cloth and food. We are given the following resource constraints: Solve these two constraints for the quantity of food produced: QF  2,000 […]

18  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 5 Resources and Trade: The Heckscher-Ohlin Model .1  Chapter Organization Model of a Two-Factor Economy   Prices and Production   Choosing the Mix of Inputs   Factor Prices and Goods Prices   Resources and […]

Answers to Textbook Problems  1. Texas and Louisiana are both oil-producing states. A decrease in the price of oil will reduce output in these two states, hurting owners of capital and workers in the oil industry. While some capital will […]

12  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 4 Specific Factors and Income Distribution .1  Chapter Organization The Specific Factors Model   Box: What Is a Specific Factor?   Assumptions of the Model   Production Possibilities   Prices, Wages, and Labor Allocation […]

Answers to Textbook Problems  1. a. The production possibility curve is a straight line that intercepts the apple axis at 400 (1200/3) b. The opportunity cost of apples in terms of bananas is 3/2. It takes 3 units of labor […]

8  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 3 Labor Productivity and Comparative Advantage: The Ricardian Model .1  Chapter Organization The Concept of Comparative Advantage A One-Factor Economy   Production Possibilities   Relative Prices and Supply Trade in a One-Factor […]

nAnswers to Textbook Problems  1. The better diversified portfolio is the one that contains stock in the dental company and the dairy 2. Our two-country model (Chapter 19) showed that under a floating exchange rate, monetary expansion at home causes […]

Chapter 21 Financial Globalization: Opportunity and Crisis     121 Chapter 20 Financial Globalization: Opportunity and Crisis .1 n Chapter Organization The International Capital Market and the Gains from Trade   Three Types of Gains from Trade   Risk Aversion   Portfolio Diversification as a […]

Answers to Textbook Problems 1. We saw that not only is GDP important in explaining how much two countries trade, but also, 2. Mexico is quite close to the United States, but it is far from the European Union (EU), […]

Chapter 2 World Trade: An Overview  5 Overview of Section I: International Trade Theory Section I of the text consists of seven chapters: Chapter 2 World Trade: An Overview   Chapter 3 Labor Productivity and Comparative Advantage: The Ricardian Model   Chapter 4 Specific […]

1. a. Since it takes considerable investment to develop uranium mines, you would want a larger b. A permanent increase in the world price of copper would cause a short-term current account deficit if the price rise leads you to […]

Chapter 19 International Monetary Systems: An Historical Overview    107 Overview of Section IV: International Macroeconomic Policy Section IV of the text consists of four chapters: Chapter 19 International Monetary Systems: An Historical Overview   Chapter 20 Optimum Currency Areas and the […]

n Answers to Textbook Problems 1. The amount of seigniorage governments collect does not grow monotonically with the rate of monetary expansion. The real revenue from seigniorage equals the money growth rate times the real balances held by the public. But […]

Chapter 22 Developing Countries: Growth, Crisis, and Reform    125 Chapter 18 Developing Countries: Growth, Crisis, and Reform .1 n Chapter Organization Income, Wealth, and Growth in the World Economy   The Gap Between Rich and Poor   Has the World Income Gap Narrowed […]

n Answers to Textbook Problems 1. A decline in investment demand decreases the level of aggregate demand for any level of the 2. A tariff is a tax on the consumption of imports. The demand for domestic goods, and thus the […]

88  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 17 Output and the Exchange Rate in the Short Run .1  Chapter Organization Determinants of Aggregate Demand in an Open Economy   Determinants of Consumption Demand   Determinants of the Current Account […]

nAnswers to Textbook Problems  1. Relative PPP predicts that inflation differentials are matched by changes in the exchange rate. 2. A real currency appreciation may result from an increase in the demand for nontraded goods relative to tradables which would […]

82  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 16 Price Levels and the Exchange Rate in the Long Run .1 nChapter Organization  The Law of One Price Purchasing Power Parity   The Relationship Between PPP and the Law of […]

n Answers to Textbook Problems 1. A reduction in the home money demand causes interest rates in the home country to fall from Rh,1 to 2. A fall in a country’s population would reduce money demand, all else being equal, since […]

76  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 15 Money, Interest Rates, and Exchange Rates .1  Chapter Organization Money Defined: A Brief Review   Money as a Medium of Exchange   Money as a Unit of Account   Money as a […]

nAnswers to Textbook Problems  1. At an exchange rate of 1.05 $ per euro, a 5 euro bratwurst costs 1.05$/euro  5 euros  $5.25. Thus, 3. When the yen depreciates vs. the dollar, its costs go up. This depresses […]

Chapter 14 Exchange Rates and the Foreign Exchange Market: An Asset Approach    69 Chapter 14 Exchange Rates and the Foreign Exchange Market: An Asset Approach .1  Chapter Organization Exchange Rates and International Transactions   Domestic and Foreign Prices   Exchange Rates and […]

1. The reason for including only the value of final goods and services in GNP, as stated in the question, is to avoid the problem of double counting. Double counting will not occur if intermediate imports 2. Equation 13-2 can […]

Chapter 13 National Income Accounting and the Balance of Payments    63 Overview of Section III: Exchange Rates and Open-Economy Macroeconomics Section III of the textbook consists of six chapters: Chapter 13 National Income Accounting and the Balance of Payments   Chapter […]

Answers to Textbook Problems 1. The main disadvantage is that it can lead to both “rent-seeking” and beggar-thy-neighbor policies, which can increase one country’s welfare at the other country’s expense. Such policies can lead to a 2. If everyone knows […]

Chapter 12 Controversies in Trade Policy    57 Chapter 12 Controversies in Trade Policy .1  Chapter Organization Sophisticated Arguments for Activist Trade Policy   Technology and Externalities   Imperfect Competition and Strategic Trade Policy Box: A Warning from Intel’s Founder   Case Study: When […]

nAnswers to Textbook Problems  1. The countries that seem to benefit most from international trade include many of the countries of the Pacific Rim: South Korea, Taiwan, Singapore, Hong Kong, Malaysia, Indonesia, and others. Though the experience of each country […]

54  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 11 Trade Policy in Developing Countries .1 nChapter Organization  Import-Substituting Industrialization   The Infant Industry Argument   Promoting Manufacturing Through Protectionism   Case Study: Mexico Abandons Import-Substituting Industrialization Results of Favoring Manufacturing: Problems […]

nAnswers to Textbook Problems  1. The arguments for free trade in this quote include: Free trade allows consumers and producers to make decisions based upon the marginal cost and benefits associated with a good when costs and prices are undistorted […]

48  Krugman/Obstfeld/Melitz •   International Economics: Theory & Policy, Ninth Edition Chapter 10 The Political Economy of Trade Policy .1  Chapter Organization The Case for Free Trade   Free Trade and Efficiency   Additional Gains from Free Trade   Rent-Seeking   Political Argument for Free Trade […]