Assume that there are two countries, Thailand and Vietnam, and two goods, rice and scooters. Unit labor requirements, aLi (for Thailand) and aLi * (for Vietnam) and the labor force, L (in Thailand) and L* (in Vietnam) are given below. aLS = 1.00 aLS *=0.50 aLR = 0.20 aLR *=0.05 L=200 L*=100

(a)Draw the production possibility frontiers (PPFs) for Thailand and the Vietnam, with scooters on the horizontal axis. Label your graphs carefully.

(b) Assume that the post-trade relative price of scooters in terms of rice, PS W/PR W, equals 7.5. Set the price of rice equal to one (i.e., choose rice as the numeraire good). Furthermore, assume that each country wishes to consume 100 scooters. Indicate the amounts produced, consumed, exported, imported, and the value of exports and imports for Thailand and Vietnam. Enter your results in a table with columns for each country and rows for the required information.

(c)Verify that trade in this example is feasible (one country's exports are another country's imports) and balanced (value of exports equals value of imports for each country).