Answer the following with complete solution What is the production level of X and Y in nation A and nation B if they decide to trade? What is the level of consumption of nations A and B after trade?Show whether each nation will improve its welfare if it trades with another nation. Show full solution Nation ANation BY = 225U₁ = (XY)UAY = 121-UB40186Ug = (XY) = Assume that international price is P₂ = 1.5 which means that for each X, 1.5 units of Y must beXpaid [e.g., Y = 1.5X]. Assume also that whoever has comparative advantage in X exports 52.33units of X and whoever has comparative advantage in Y exports 78.5Y.

1. Production Levels After Trade:Nation A specializes in producing commodity Y.Nation B specializes…

Nation A Nation B Y = 225 U₁ = (XY) UA Y = 121 - UB 40 186 Ug = (XY) = Assume that international price is P₂ = 1.5 which means that for each X, 1.5 units of Y must be X paid [e.g., Y = 1.5X]. Assume also that whoever has comparative advantage in X exports 52.33 units of X and whoever has comparative advantage in Y exports 78.5Y.

Nation A Nation B Y = 225 U₁ = (XY) UA Y = 121 - UB 40 186 Ug = (XY) = Assume that international price is P₂ = 1.5 which means that for each X, 1.5 units of Y must be X paid [e.g., Y = 1.5X]. Assume also that whoever has comparative advantage in X exports 52.33 units of X and whoever has comparative advantage in Y exports 78.5Y.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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