Question
Countries I and B can produce grapes and peers using only labor. In country I, 200 units of labor are available; 2 units of labor
Countries I and B can produce grapes and peers using only labor. In country I, 200 units of labor are available; 2 units of labor are necessary for producing one ton of grapes and 5 units of labor are necessary for producing one ton of peers. In country B, 150 units of labor are available; 3 units of labor are necessary for producing one ton of grapes and 5 units of labor are necessary for producing one ton of peers. Consumers in both countries like both grapes and peers.
Complete the table below for country I. If there is insufficient information to give a precise number, fill in an interval.
Autarky | Free trade | |
Relative price of grapes, Pg/Pp | 3/5 | |
Quantity of grapes produced domestically | ||
Quantity of peers produced domestically | ||
Units of labor necessary for obtaining one ton of grapes | 2 | |
Units of labor necessary for obtaining one ton of peers | 5 |
Which country gains more from trade ?
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