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You are given the following Classical-type table showing the number of days of labor input required to obtain 1 unit of output of each of
- You are given the following Classical-type table showing the number of days of labor input required to obtain 1 unit of output of each of the five commodities in each of the two countries:
Country | Wage Rate | Wheat | Sheet Metal | Cheese | Computers | Cloth |
U.S. | $3 | 2 | 4 | 5 | 2 | 3 |
U.K. | 1 | 6 | 4 | 3 | 7 | 4 |
- Assume that the wage rate in the United Kingdom (WUK) is 1/day, the wage rate in the United States (WUS) is $3/day, and the exchange rate (e) is $1 = 0.5. With this information, determine the goods that will be U.K. exports and the goods that will be U.S. exports.
Value of the pointer is _____________
Goods that U.K. exports to U.S. are __________________________________________
Goods that U.S. exports to U.K. are ___________________________________________
- Keeping WUK at 1/day and keeping the exchange rate at $1 = 0.5, calculate the upper and lower limits (in dollars per day) to the U.S. wage rate that are consistent with two-way trade between the countries.
The Upper Limit is _________ $/day
The Lower Limit is _________$/day
- With WUK at 1/day and WUS at $3/day, calculate the upper and lower limits (in per $) to the exchange rate that are consistent with two-way trade between the countries.
The Upper Limit is _________ / $
The Lower Limit is _________ / $
- In the following two-good, multi-country example of labor requirements, do all the countries stand to gain from trade if the international terms of trade are 1 C = 1.8 W? If so, what commodities will each country export and import?
Country | Wheat | Cloth |
U.K. | 2 | 3 |
France | 3 | 5 |
U.S. | 3 | 6 |
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