Question
Now consider the Specific Factors Model. Costa Rica is a small country - their production is too small to influence world prices. Assume that in
Now consider the Specific Factors Model. Costa Rica is a small country - their production is too small to influence world prices. Assume that in 1980 Costa Rica did not trade and produced goods X and Y, with a relative price of 1.35Y/X. Which statement is true? and explain why?
a.The relative price of X depends only on the PPF
b.The relative price of X depends on both the PPF and the Indifference Map.
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Macroeconomics
Authors: Charles I. Jones
3rd edition
978-0393123944, 393123944, 393923908, 978-0393923902
