Suppose that home has 100 workers a marginal product of 4


Suppose that Home has 100 workers, a marginal product of 4 making apples, and a marginal product of labor of 4 making shirts. Foreign has 100 workers, a marginal product of labor of 8 making apples and a marginal product of labor of 6 in shirts A) In no-trade equilibrium, what are the relative prices of apples in Home and in Foreign? What are the relative prices of shirts in Home and in Foreign? b) What range of relative prices could be observed in a trade equilibrium? c) Draw the production possibilities frontier, world price line and indifference curves for each country for a trade equilibrium when the relative price on world markets is halfway between their autarky relative prices. Label the intercepts of the world price line and PPF.

Request for Solution File

Ask an Expert for Answer!!
Business Economics: Suppose that home has 100 workers a marginal product of 4
Reference No:- TGS01546299

Expected delivery within 24 Hours