Question
Given the labor requirements in the table below: Textile Autos UK 3 days 6 days USA 2 days 5 days a.Calculate the number of units
Given the labor requirements in the table below:
Textile
Autos
UK
3 days
6 days
USA
2 days
5 days
a.Calculate the number of units of textiles and autos that can be produced from 1 day of labor in each country.
b.Suppose that the US has 1000 days of labor available. Construct the PPF for the US.
c.Construct the CPF (after trade) for the USA if the terms of trade is 1 Auto : 2 Textiles.
d.Suppose that the US always wishes to consume autos and textiles in the ratio of 1 Auto to 10 Textiles. What quantity of each good would the US consume in autarky? What quantity of each good would the US consume with trade and what will be the gains from trade?
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International Political Economy
Authors: Thomas Oatley
6th Edition
1138490741, 9781138490741
