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There are multiple mathematical expression in the question, so I have put the questions as images instead. Please answer Example 1 through 6. Suppose the
There are multiple mathematical expression in the question, so I have put the questions as images instead. Please answer Example 1 through 6.
Suppose the World includes two countries H and F, producing two goods 1 85 2, with the following information: (1). labor endowment: LH : 6, LF : 4 (1). labor requirement for producing 1 unit of good: a? : 1, a? : 2; of : 1, a; : 1 l 1 (3). utility for both countries: u(c1, C2) = 012C; Notice that the above variables are given (predetermined). They are information that are available to us to solve for the equilibrium. These variables are called exogenous variables. For our above-mentioned example, they include: technology (the labor productivities), prefer- ence (the utility function), and endowment (in the Ricardian case, it includes only labor). 0 Question: Who export What? 0 Step 1. Production: 0 Step 2. Wage determination: 0 Step 3. Optimal Consumption: 0 Step 4. market clearing condition: 0 Summary of the Equilibrium: Example - 2 Exercise: assume LH = 12, does the equilibrium of complete specialization exist? (Hint: check H whether the condition H = NIHStep by Step Solution
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