Below are five examples of unit labor requirements for a foreign country (denoted with an asterisk) and
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Question:
Below are five examples of unit labor requirements for a foreign country (denoted with an asterisk) and a home country. There are two goods: good-1 and good-2. For each example, show which country has the comparative advantage in which good, and which country has the absolute advantage. (a) a(L1)=0.5 a(L2)=0.2 a(L1 *)=0.2 a(L2 *)=0.5
(b) a(L1)=0.5 a(L2)=0.2 a(L1 *)=0.25 a(L2 *)=0.1
(c) a(L1)=0.6 a(L2)=0.3 a(L1 *)=0.1 a(L2 *)=0.3
(d) a(L1)=0.7 a(L2)=0.1 a(L1 *)=0.7 a(L2 *)=0.07
(e) a(L1)=0.4 a(L2)=0.1 a(L1 *)=0.004 a(L2 *)=0.002
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