Hours of Labor Required to produce Cheese and Wine USAFRANCECheese2030Wine820 Show the pattern of specialization, and hence trade is beneficial to each country.If the US is endowed with 1600 units hours of labor and France 3000 labor hours, how many cheese and wine will they produce after trade begins and why? Draw the PFF for both countries and show the post-trade production points. Explain.Is it possible that the world equilibrium price to be Pc/Pw = ¾ ?Explain. Which country will gain more from this trade if Pc/Pw = 2 and why ? ExplainWage rate in France is $4 per unit hours of labor.( when calculated in dollars) What should the wage rate interval in the US be if trade is flowing between the two countries based on comparative advantage? İf the wage rate in USA is 12$ what will happen to trade pattern of the countries?

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Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 1QCMC

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Hours of Labor Required to produce Cheese and Wine

	USA	FRANCE
Cheese	20	30
Wine	8	20

Show the pattern of specialization, and hence trade is beneficial to each country.
If the US is endowed with 1600 units hours of labor and France 3000 labor hours, how many cheese and wine will they produce after trade begins and why? Draw the PFF for both countries and show the post-trade production points. Explain.
Is it possible that the world equilibrium price to be Pc/Pw = ¾ ?Explain. Which country will gain more from this trade if Pc/Pw = 2 and why ? Explain
Wage rate in France is $4 per unit hours of labor.( when calculated in dollars) What should the wage rate interval in the US be if trade is flowing between the two countries based on comparative advantage? İf the wage rate in USA is 12$ what will happen to trade pattern of the countries?

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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