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B1: Ricardian trade theory Questions 9-18 relate to the following information. Consider a world consisting of two countries, Kenya and Uganda. Each country can
B1: Ricardian trade theory Questions 9-18 relate to the following information. Consider a world consisting of two countries, Kenya and Uganda. Each country can produce two goods, Shoes and Grain, using only labour. Producers of each good are perfectly competitive and labour is perfectly mobile between production of the two goods. The following table provides the labour needed to produce one unit of each good in each country: Uganda Pair of Shoes Sack of Grain Kenya 30 5 48 12 The labour force of Kenya consists of 240 workers and that of Uganda consists of 300 workers. Autarky equilibrium For questions 9-12, suppose initially that there is no international trade between the two countries. Question 9 (2 points) Saved What is the price of a pair of shoes in Kenya relative to the price of a sack of grain? Question 10 (2 points) Saved If Kenyan households choose to consume 24 sacks of grain, how many pairs of shoes can they consume? Question 11 (2 points) Saved What is the price of a pair of shoes in Uganda relative to the price of a sack of grain? Question 12 (2 points) If Ugandan households choose to consume 21 sacks of grain, how many pairs of shoes can they consume?
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