HW 4 - due Wednesday, June 22 1. Uganda and Zaire each produce only two goods (rugs and tables) and labor is the only factor of production. The table below shows for the two countries the maximum of each good they could produce if they allocated all their resources to it. Rugs Tables Uganda 144 24 Zaire 48 12 Suppose that Uganda uses half its workers to produce tables and half to produce rugs. What is its output of each good? Rugs = Tables =_ b) Suppose that Zaire uses half its workers to produce tables and half to produce rugs. What is its output of each good? Rugs = Tables = c) With each country splitting its workers between tables and rugs, what is the total output of tables in the two countries? Of rugs? Rugs = Tables = d) Which country has the absolute advantage in tables and rugs? Which country has a comparative advantage in tables? In rugs? Explain why. Absolute adv in tables: Explanation: Absolute ady in rugs: Comparative adv in tables: Comparative adv in rugs:g) What would be the ideal exchange rate for rugs and tables if after specialization Uganda and Zaire engaged in trade?c) What would each country produce and how much if the two countries specialized in producing the good for which they ONLY have a comparative advantage. What would be the total global output of each good? f) Has global output in both goods increased? IF NOT - how should Zaire and Uganda split their production into rugs and tables such that global output is greater for both goods? 2