Consider the following data for two countries, called East and West, displayed in the table below....
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Consider the following data for two countries, called East and West, displayed in the table below. Assume that individuals in both countries spend 20% of their income on pens and 80% of their income on notepads. Labor force Number of notepads one worker can produce Number of pens one worker can produce East 200 5 100 West 100 50 200 a) In autarky (no trade), what is the relative price of a notepads (i.e., in terms of pens) in the East and in the West? b) In autarky (no trade), what is the relative price of a pens (i.e., in terms of notepads) in the East and in the West? c) Does either country have a comparative advantage? d) In autarky (no trade), how many notepads and pens do individuals in the East and West consume? e) Under free trade (and assuming both countries completely specialize) how many notepads and pens do individuals in the East and West consume? f) Compare consumption of individuals in the East and West under free trade to what they would consume under free migration: what do you conclude? Consider the following data for two countries, called East and West, displayed in the table below. Assume that individuals in both countries spend 20% of their income on pens and 80% of their income on notepads. Labor force Number of notepads one worker can produce Number of pens one worker can produce East 200 5 100 West 100 50 200 a) In autarky (no trade), what is the relative price of a notepads (i.e., in terms of pens) in the East and in the West? b) In autarky (no trade), what is the relative price of a pens (i.e., in terms of notepads) in the East and in the West? c) Does either country have a comparative advantage? d) In autarky (no trade), how many notepads and pens do individuals in the East and West consume? e) Under free trade (and assuming both countries completely specialize) how many notepads and pens do individuals in the East and West consume? f) Compare consumption of individuals in the East and West under free trade to what they would consume under free migration: what do you conclude?
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1 In autarky no trade the relative price of a notepad in terms of pens in the East is 5 pens per not... View the full answer
Related Book For
Statistics For Business And Economics
ISBN: 9780538481649
11th Edition
Authors: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams
Posted Date:
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