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6. Imagine that the international relative price of computers is 4 3 . Let's focus on Dystopia. (a) Sketch in the same graph the autarky
6. Imagine that the international relative price of computers is 4 3 . Let's focus on Dystopia. (a) Sketch in the same graph the autarky and international trade equilibrium, showing production, consumption, and trade for each good in each case. (b) How many units of Dystopia exportable good will produce, consume and export this country? (Hint: use the budget constraint/trade balance condition when solving for consumption) (c) Show that the nominal wage increased less than the price of programs but more than the price of computers. What does it imply for the real wage in terms of programs? What does it imply for the real wage in terms of computers? (d) Did Dystopia have welfare gains from trade? Compute the gains/losses in terms of utils
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