Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In a standard Ricardian model, two countries (China and the US) produce and trade two goods (apparel and wheat). Each worker in China can produce

In a standard Ricardian model, two countries (China and the US) produce and trade two goods (apparel and wheat). Each worker in China can produce 2 units of apparel or 5 bushels of wheat. Each worker in the US can produce 1 unit of apparel of 10 bushels of wheat. The labor endowments are 100 in China and 20 in the US. 


(a) What is the autarky relative price of apparel in China? 


(b) What is the autarky relative price of apparel in the US? 


(c) Which country has a comparative advantage in each good? 


(d) When the two countries open to free trade, draw the world relative supply curve on a diagram, with the relative supply of apparel on the horizontal axis and world relative price of apparel on the vertical axis.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

a To determine the autarky relative price of apparel in China we compare the labor requirements for producing apparel and wheat in China The labor req... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics Principles And Policy

Authors: William J. Baumol, Alan S. Blinder

11th Edition

0324586213, 978-0324586213

More Books

Students also viewed these Economics questions

Question

In Problems 1130, solve each equation by factoring. x 2 - 9x = 0

Answered: 1 week ago