Q3. Suppose the technologies available to countries A and B are given by the following table: S 4 (A)Consider the information in the table above. Suppose that wage rate in A, WA, equals $9 per hour and the wage rate in B, when measured in dollars, EWs, equals $5 per hour. Calculate the pretrade prices of S and T in both countries. Is there a basis for mutually beneficial trade? Why or why not? (B) Suppose that Wa rises to $12 per hour. Everything else held constant, (1) what would happen to trade patterns? Why? (1i) (ili) What options are available to A to resolve this situation?

Q3. Suppose the technologies available to countries A and B are given by the following table: S 4 (A)Consider the information in the table above. Suppose that wage rate in A, WA, equals $9 per hour and the wage rate in B, when measured in dollars, EWs, equals $5 per hour. Calculate the pretrade prices of S and T in both countries. Is there a basis for mutually beneficial trade? Why or why not? (B) Suppose that Wa rises to $12 per hour. Everything else held constant, (1) what would happen to trade patterns? Why? (1i) (ili) What options are available to A to resolve this situation?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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