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[c] How does the equilibrium production and consumption change with trade? Show on the graph how openness to trade affects consumers' utility. lligairil put quantity
[c] How does the equilibrium production and consumption change with trade? Show on the graph how openness to trade affects consumers' utility. lligairil put quantity of production in clothing (22;; on the xam's and quantity of production in food (22;: on the y-axis. d How does the chan e in production affect factor allocations? E e Examine the chan es in real returns for the workers in each sector "J "J the E : Pc' PT real returns for the capital owners in the clothing sector (FEE? 1%), and the real rental rate of land in the food sector (PL, Fir.) What are the key assumptions on the production technology that drive the change in each result? Policy makers are considering the imposition of a 1D% tariff on food. This tariff would raise the price of food in the country by 1|???) and would not affect the price of clothing. {f} 1What is the effect of this tariff on the world relative price? {g} Who benets from the tariff policy compared to free trade? Again, examine the changes in real returns for the workers in each sector (, ), the real returns for the capital owners in the clothing sector (Pic, Pip) , and the real rental rate of land in the food sector (i, i). Let us consider again, Cruztopia under autarky and further assume that the economy acquires additional land. {h} Show on a graph how the autarky equilibrium production and consumption would change compared to part (b). Hint: There is no change in the eateries: price! {i} Examine the changes in real returns for the workers in each sector ( w w ), the "1"? PT real returns for the capital owners in the clothing sector (i, i), and the real rental rate of land in the food sector (Pi, Pi) . C Iv
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