Assume we are in a Ricardian world, where there are 2 countries: Home and Foreign, 2 goods: x and y, and one factor of production: Labor(L). The labor unit requirements for production of each good and the aggregate labor supply in each country are given as follows: Home country: ax= 4, ay= 3, L= 2400 Foreign country: a*x= 10, a*y= 6, L= 3000 d) If there is no trade between Home and Foreign, what will the relative price of x in terms of y be in each country?
Assume we are in a Ricardian world, where there are 2 countries: Home and Foreign, 2 goods: x and y, and one factor of production: Labor(L). The labor unit requirements for production of each good and the aggregate labor supply in each country are given as follows: Home country: ax= 4, ay= 3, L= 2400 Foreign country: a*x= 10, a*y= 6, L= 3000 d) If there is no trade between Home and Foreign, what will the relative price of x in terms of y be in each country?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter16: Economies In Transition
Section: Chapter Questions
Problem 8SQP
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Assume we are in a Ricardian world, where there are 2 countries: Home and Foreign, 2 goods: x and y, and one factor of production: Labor(L). The labor unit requirements for production of each good and the
Home country: ax= 4, ay= 3, L= 2400
Foreign country: a*x= 10, a*y= 6, L= 3000
d) If there is no trade between Home and Foreign, what will the relative price of x in terms of y be in each country?
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