2. Suriname and Paraguay consume two goods, coffee and machines, and labour is the only input into production. The amount of labour (in hours) required to produce one unit of each good and labour endowments (L) are: Coffee (lbs.) Machines Suriname 15 Paraguay 4 3 2 1200 Let machines be the numerairerso that the price of machines is always one, so you must put coffee on the horizontal axis. a. List each country's good(s) of AA and CA, if any, and relate to each country's autarky (relative) price of coffee. b. If the size of the labour endowment (L) tripled in Paraguay, would your answer to part a. change? Why or why 500 not? For the rest of this question, use the original L. c. Using the PPF diagram, show Paraguay's complete autarky equilibrium and solve for Paraguay's production and consumption of each good if its total consumption of machines in autarky is 100. Be sure to label as many points as you can. d If the world (or FT) (reloti

2. Suriname and Paraguay consume two goods, coffee and machines, and labour is the only input into production. The amount of labour (in hours) required to produce one unit of each good and labour endowments (L) are: Coffee (lbs.) Machines Suriname 15 Paraguay 4 3 2 1200 Let machines be the numerairerso that the price of machines is always one, so you must put coffee on the horizontal axis. a. List each country's good(s) of AA and CA, if any, and relate to each country's autarky (relative) price of coffee. b. If the size of the labour endowment (L) tripled in Paraguay, would your answer to part a. change? Why or why 500 not? For the rest of this question, use the original L. c. Using the PPF diagram, show Paraguay's complete autarky equilibrium and solve for Paraguay's production and consumption of each good if its total consumption of machines in autarky is 100. Be sure to label as many points as you can. d If the world (or FT) (reloti

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter18: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 2TY

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