Consider the following scenario: Country A Country B Soybeans 8 Textiles 4 Suppose that wa=$1000 and e=1 (e is the exchange rate). What is the maximum level of wp (expressed in $) such that these 2 countries trade according to Comparative Advantage?

Consider the following scenario: Country A Country B Soybeans 8 Textiles 4 Suppose that wa=$1000 and e=1 (e is the exchange rate). What is the maximum level of wp (expressed in $) such that these 2 countries trade according to Comparative Advantage?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 35CTQ: If countries reduced trade barriers, would the international flows of money increase?

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Question

Pls help with below homework.

Consider the following scenario:
Country A
Country B
Soybeans
3
8
Textiles
4
8
Suppose that wa=$1000 and e=1 (e is the exchange rate). What is the maximum level of wp (expressed in $) such that
these 2 countries trade according to Comparative Advantage?

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