Question
Suppose that, in a Classical model with two goods, Germany can produce 50 units of steel with one day of labor and 30 units of
Suppose that, in a Classical model with two goods, Germany can produce 50 units of steel with one day of labor and 30 units of textiles with one day of labor; Switzerland can produce 45 units of steel with one day of labor and 45 units of textiles with one day of labor. If the exchange rate is fixed at 1 Swiss franc = 1 euro and if the Swiss wage rate is 10 francs per day, then, in trading equilibrium, German wages
Answer: must be less than 10 euros per day.
Question: Can you show me step-by-step how to reach this conclusion?
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Audit Guide Audit Sampling
Authors: AICPA
2nd Edition
195068833X, 978-1950688333
