ECO203: Consider a simplified and hypothetical example of two countries Singapore and Malaysia trading in two goods electronics: International Economics Assignment, SUSS, Singapore

Question

Consider a simplified and hypothetical example of two countries Singapore and Malaysia trading in two goods electronics (E) and food products (F).

Using all of its resources (i.e., labor and capital), Singapore can produce either 50 (units of) electronics, or 20 food products.

Using all of its resources, Malaysia can produce either 50 electronics or 100 food products. There are increasing opportunity costs of production.

• Solve for the comparative advantages of both countries and the mutually beneficial Terms of Trade.
• Using the Heckscher-Ohlin theory of trade, analyze the patterns of trade in detail.
• The Russian-Ukraine war has affected global supply chains. In particular, the cost of chicken feed increased sharply. To curb rising prices, Malaysia imposed a ban on chicken exports to Singapore in 2022.