Two countries are producing two goods: one perfectly tradable t, the other non-tradable nt. For each good i =t,nt and each country j= 1,2, the production function is linear and labor is the only input Y{ = A{L{ Workers can freely choose to work in any sector in their home country, but cannot move to another country. Assume that A} = A = 1, A? = 4, and A, = 3. Then which country %3D %3D would have higher price for the tradable good? and which would have higher price for the non-tradable good?

Two countries are producing two goods: one perfectly tradable t, the other non-tradable nt. For each good i =t,nt and each country j= 1,2, the production function is linear and labor is the only input Y{ = A{L{ Workers can freely choose to work in any sector in their home country, but cannot move to another country. Assume that A} = A = 1, A? = 4, and A, = 3. Then which country %3D %3D would have higher price for the tradable good? and which would have higher price for the non-tradable good?

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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