Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 3 (14 marks) Suppose that, because of a trade agreement between South Africa and Zimbabwe barriers to trade are lifted, such that these countries

image text in transcribed
Question 3 (14 marks) Suppose that, because of a trade agreement between South Africa and Zimbabwe barriers to trade are lifted, such that these countries can freely trade both goods without any costs. Also, Zimbabweans and South Africans enjoy cell phones and rice. Suppose that these are the only two products they consume and produce with rice being relatively more labour intensive and cell phones being relatively more capital intensive in the production process ( and all = 0.20 and South Africa is a hub for new technology and capital. As a result of the lack of innovation in Zimbabwe, 2000 units of Zimbabwe capital stock has been relocated to South Africa Assume that the capital and labour market are in equilibrium. Using an Edgeworth box and the Rybczynski proposition describe the effects of capital on the production of cell phones and rice in South Africa. [10]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

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

Step: 2

blur-text-image

Step: 3

blur-text-image

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

Introduction To Business Statistics

Authors: Ronald M. Weiers

7th Edition

978-0538452175, 538452196, 053845217X, 2900538452198, 978-1111524081

Students also viewed these Economics questions