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A country produces three goods [21, 22, 23] and the output vector is X= [9, 8, 8]. The world's output vector is Xw =

A country produces three goods [21, 22, 23] and the output vector is X= [9, 8, 8]. The world's output vector is Xw = [500, 600, 1400], the free trade price vector is p = [4,4,4] and the commonly used input-output matrix is: [112] A = 2 1 where the first row describes labour coefficients, the second row describes land coefficient, and the third row describes capital coefficients. All countries have identical homothetic preferences and balanced trade. (a) Find the country's vector of commodity trade. Show that the balance of trade is zero. (b) Describe the country's pattern of trade in factor content. (c) Calculate the equilibrium factor prices.

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a The countrys vector of commodity trade is 1 2 0 This means that the country imports 1 unit of good ... blur-text-image

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