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2. Farmia is a labor-abundant country that grows coffee and wheat. Assume that labor and land are the only two inputs. Coffee production is labor
2. Farmia is a labor-abundant country that grows coffee and wheat. Assume that labor and land are the only two inputs. Coffee production is labor intensive, and wheat production is land intensive. Labor can work in either the coffee or the wheat industry and can move easily back and forth between the two. But land is specialized; land on the plains is suited to produce wheat and land in the mountains to produce coffee. "Wheat land" is useless in producing coffee and "coffee land" is useless in producing wheat. If Farmia opens trade with a country with identical tastes, what will happen in the short run to a) Farmia's production of wheat and coffee? What information or theorem did you use as the basis for your answer? b) Prices of wheat and coffee in Farmia? How do you know? C) Wages in Farmia? How do you know? d) The price of wheat land in Farmia? How do you know? e The price of coffee land in Farmia? How do you know? The welfare or purchasing power or workers, owners of wheat land, and owners of coffee land in Farmia? How do you know
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