a very good grading !!!
There are three countries in the world, H, F and E, and there
are no trade costs among them. They can produce two goods: cars and
textiles. The labor requirement for producing one unit of goods and
total labor endowment of each country are listed below:
- This Is Very Easy Please Answer Fast And I Will Get You A Very Good Grading There Are Three Countries In The World 1 (18.69 KiB) Viewed 34 times
where 𝐷 denotes quantity of demand and 𝑝 denotes price: 𝐷𝑡/𝐷𝑐 =
𝑝𝑐/𝑝𝑡
(a) Draw the world’s relative supply and demand curve. In your
graph, make sure the variable on horizontal axis is world relative
demand/supply of textile, and the variable on vertical axis is
world relative price of textile. Carefully label the important
points and coordinates.
b) How do countries specialize in goods production?
(c) Suppose F experiences a productivity boost, and consequently
𝑎𝑡 𝐹 is reduced to 2. Everything else stays unchanged. Draw the
world’s relative supply and demand curve in a new graph, and
describe each country’s specialization patterns.
(d) Compare your answers on country specializations in (b) and
(c), and rationalize your findings
Cars Textiles Country H Labor 100 H = = 2 F a = a = 1 = 10 a = 4 af = 2 = 5 af = 6 a = 400 E 240