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C. (28 pts) Ricardian Model. Consider the following table that describes the marginal products of labor for 2 goods (apples and oranges) and the total
C. (28 pts) Ricardian Model. Consider the following table that describes the marginal products of labor for 2 goods (apples and oranges) and the total units of labor in a home and foreign country. b. (7 pts. ) Set the price of orange equal to 1,Po=1. At what set of relative prices of apple to orange Pa/Po will the home country be willing to trade? At what set of relative prices of apple to orange Pa/Po will the foreign country be willing to trade? At what set of relative prices of apple to orange Pa/Po will both countries be willing to trade? c. (7 pts.) Pick a relative price of apple to orange Pa/Po at which both countries are willing to trade. Clearly illustrate in a graph the production possibility frontier under autarky and the consumption possibility frontier with trade of the Home country (including axis labels, relative prices, the slopes and intercepts.) Using the graph, show that there are gains in consumption opportunities from opening up to trade by specializing in the way described in Part a
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