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Now suppose that Home is in autarky. Goods market clearing therefore requires that consumption equals production: CI- = X: for 1' E {1, 2}. (e)

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Now suppose that Home is in autarky. Goods market clearing therefore requires that consumption equals production: CI- = X: for 1' E {1, 2}. (e) What is the equilibrium relative goods price pr in autarky? How does the relative price change with 3? Why? Now note that labor market clearing also requires: L1 + L2 : L. (f) What is the allocation of labor in each sector, L1 and L2? (g) What are real factor incomes in terms of goods 1 and 2, Le. fl, %, {111, 17;, E, and 1%

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