Question
3.(20 Points) Consider the following Ricardian model with unit labor requirements for two commodities (X and Y) and two countries (Home and Foreign) and
3.(20 Points) Consider the following Ricardian model with unit labor requirements for two commodities (X and Y) and two countries (Home and Foreign) and the labor endowments: L Unit Labor Requirements =400 (home) L* = 360 (Foreign): Good X Y Home 10 20 Foreign 30 18 L*=360 (endowed labor) L=400 Home Country's Production possibility curve is depicted below left-side with its autarky point (A) at mid-point (X =20 and Y=10) and Foreign Country's Production possibility curve is depicted below right-side with its autarky point (A*) at mid-point (X* =6 and Y*=10): Y Yk 20 0 A 4/7 20 40 X 0 4* 14 12 X*
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