Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

1. Belgium and Germany both make beer and chocolate. In Belgium, it takes 4 hours of labor to make a case of beer and 6

1. Belgium and Germany both make beer and chocolate. In Belgium, it takes 4 hours of labor to make a case of beer and 6 hours of labor to make a box of chocolate. In Germany, it takes 2 hours of labor to make a case of beer and 5 hours of labor to make a box of chocolate. Please explain all answers. Each part has 6 points. Which country has the absolute advantage in making chocolate and which one in making beer? What is the autarky relative price of chocolate in each country? Which country has the comparative advantage in making chocolate and which one in making beer? What happens to the real wage in Belgium when it opens up to trade with Germany and the relative price of chocolate is PCHOC/PBEER = 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Linear Algebra And Its Applications

Authors: David Lay, Steven Lay, Judi McDonald

6th Global Edition

978-1292351216, 1292351217

More Books

Students also viewed these Economics questions