Consider Ricardian model with two countries, Home and Foreign, and three goods: Cloth, Food and Books. Labor is the only factor of production. Cloth and Food are freely traded between countries, whereas Books are non-tradable. Unit labor requirements in the Home country are 12 for Cloth, 3 for Food and 4 for Books. Unit labor requirements in the Foreign country are 2 for Cloth, 2 for Food and 3 for Books. The total amount of labor in the Home country is 1500, and the total amount of labor in the foreign is 1000. If the world price of Cloth is 18 and the world price of Food is 12, what is the price of Books in the Home country? [Insert the nearest integer.]

Consider Ricardian model with two countries, Home and Foreign, and three goods: Cloth, Food and Books. Labor is the only factor of production. Cloth and Food are freely traded between countries, whereas Books are non-tradable. Unit labor requirements in the Home country are 12 for Cloth, 3 for Food and 4 for Books. Unit labor requirements in the Foreign country are 2 for Cloth, 2 for Food and 3 for Books. The total amount of labor in the Home country is 1500, and the total amount of labor in the foreign is 1000. If the world price of Cloth is 18 and the world price of Food is 12, what is the price of Books in the Home country? [Insert the nearest integer.]

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

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