1. Now home opens up to trade. How does home's export supply curve change, if at all, after the population growth has occurred, compared to its export supply with only 25 workers? Draw the export supply curve for home for 25 workers and for 35 workers 2. What will happen to the equilibrium relative price of w heat under free trade? Show using a suitable diagram. Hint: Think about what happens to the foreign import demand curve when only home's population grows but foreign's population stays constant
1. Now home opens up to trade. How does home's export supply curve change, if at all, after the population growth has occurred, compared to its export supply with only 25 workers? Draw the export supply curve for home for 25 workers and for 35 workers 2. What will happen to the equilibrium relative price of w heat under free trade? Show using a suitable diagram. Hint: Think about what happens to the foreign import demand curve when only home's population grows but foreign's population stays constant
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. Now home opens up to trade. How does home's export supply curve change, if at all, after the population growth has occurred, compared to its export supply with only 25 workers? Draw the export supply curve for home for 25 workers and for 35 workers
2. What will happen to the equilibrium relative price of w heat under free trade? Show using a suitable diagram. Hint: Think about what happens to the foreign import demand curve when only home's population grows but foreign's population stays constant
Transcribed Image Text:Home - autarky
Cloth, Qc
70
Population grows by 40% from 25 to 35 workers
50
A'
35
U2
25
A
·U1
Wheat, Qw
50 70
100
140
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