Answer ALL parts of this question. Britain and France are countries in a Ricardian trade model. Each country produces wine and bread. Unit labour requirement for wine in Britain, in hours: aw = 12 Unit labour requirement for bread in Britain, in hours: aLB = 3 Unit labour requirement for wine in France, in hours: atw = 2 Unit labour requirement for bread in France, in hours: ažß = 1 Britain and France both have 600 hours of labour available. Qw and QB are the quantities of wine and bread produced in Britain. Qw and Q are the quantities produced in France.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
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Chapter6: Managing In The Global Economy
Section: Chapter Questions
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Question 8 d e and f

 

Please help solve 8 d e and f

Answer ALL parts of this question.
Britain and France are countries in a Ricardian trade model. Each country produces
wine and bread.
*
Unit labour requirement for wine in Britain, in hours: alw = 12
Unit labour requirement for bread in Britain, in hours: ALB = 3
Unit labour requirement for wine in France, in hours: atw = 2
Unit labour requirement for bread in France, in hours: ažß = 1
Britain and France both have 600 hours of labour available.
Qw and QB are the quantities of wine and bread produced in Britain.
Qw and Q are the quantities produced in France.
(a)
Explain what is meant by the "unit labour requirement in hours".
(b)
Calculate labour productivity, in terms of units produced per hour, for each good in
each country.
(c)
Explain which country has the comparative advantage in wine production, and why.
(d)
Under autarky, calculate the relative price of wine in each country.
(e)
With wine on the y-axis and bread on the x-axis, draw and label the production
possibility frontiers for both countries. Label the axes.
(f)
Now assume there is free trade. On a new diagram, show the world relative supply
of wine, giving world relative price on the y-axis as
Pw
PB
and world relative quantity on the x-axis as
Qw + Qw
QB + Q B
If moulal
Transcribed Image Text:Answer ALL parts of this question. Britain and France are countries in a Ricardian trade model. Each country produces wine and bread. * Unit labour requirement for wine in Britain, in hours: alw = 12 Unit labour requirement for bread in Britain, in hours: ALB = 3 Unit labour requirement for wine in France, in hours: atw = 2 Unit labour requirement for bread in France, in hours: ažß = 1 Britain and France both have 600 hours of labour available. Qw and QB are the quantities of wine and bread produced in Britain. Qw and Q are the quantities produced in France. (a) Explain what is meant by the "unit labour requirement in hours". (b) Calculate labour productivity, in terms of units produced per hour, for each good in each country. (c) Explain which country has the comparative advantage in wine production, and why. (d) Under autarky, calculate the relative price of wine in each country. (e) With wine on the y-axis and bread on the x-axis, draw and label the production possibility frontiers for both countries. Label the axes. (f) Now assume there is free trade. On a new diagram, show the world relative supply of wine, giving world relative price on the y-axis as Pw PB and world relative quantity on the x-axis as Qw + Qw QB + Q B If moulal
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