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Please help me with the below question, Question 1 - Ricardian World (30 percent) Suppose that there are two countries, Home and Away, each endowed
Please help me with the below question,
Question 1 - Ricardian World (30 percent) Suppose that there are two countries, Home and Away, each endowed with one factor of production, labour (4). The citizens of each country consume two goods - fish (F) and salt (5). Labour Available Unit Labour Requirements (millions of Hours per pound of Hours per pound of salt hours) Fish Home 90 0.75 2.00 Away 150 1.50 3.00 a. Assign the absolute and comparative advantages for the production of each good. (10 percent b. What would be the relative price of fish to salt In the Home country under suterky? What would be the relative price of fish to salt In the Away country under autarky? (4 percent) C. Graph the world relative supply curve for fish. (8 percent] d. Suppose that trade results In a relative price of fish at 0.4 pounds of salt per pound of fish. Are both countries better off with International trade? Explain. (8 percent)Step by Step Solution
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