Question
I know how to get (i) & (ii), but I am so confused about (iii), would you mind explain the process for me? Thank you
I know how to get (i) & (ii), but I am so confused about (iii), would you mind explain the process for me? Thank you so much!!!
COMPARATIVE ADVANTAGE:Gloves come in pairs: A left (hand) glove has to find a right (hand) glove. A representative worker in the North can produce EITHER 90 right hand gloves OR 10 left hand gloves (or any convex combination of these figures). There are 10 workers living in the North. A representative worker in the South can produce either 1 right hand glove or 9 left hand gloves (or any convex combination of these figures).There are 100 workers in the South.
(i) How many pairs of gloves the North will produce in the case of autarky (no trade)? And how many pairs of gloves the South will produce under no trade?(90,90)
(ii) Suppose that these two areas open up to trade and one right hand glove can be exchanged for one left hand glove.How may pairs of gloves will the North consume? And the South? (450,450)
(iii) How the free trade equilibrium would look like under 10,000 workers in the South?
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