China and the US produce t-shirts and rice using labour only. Production functions and labour endowments of the two economies are given below: China: QT = 2LT QR = 2LR LT + LR = 200 United States: QT * = 5L * T QR = 10L * RL T+L * R = 100 Suppose that the utility function for each worker in each country is the same, and given by: U(CT, CR) = 13 In CT + 2 3 In CR (a) What is the marginal utility of T-shirts? (b) What is the marginal utility of rice?

ENGR.ECONOMIC ANALYSIS
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China and the US produce t-shirts and rice using labour only. Production functions and labour endowments of the two economies are given below:
China: QT = 2LT QR = 2LR LT + LR = 200
United States: QT * = 5L * T QR* = 10L * RL T+L * R = 100
Suppose that the utility function for each worker in each country is the same, and given by:
U(CT , CR) = 13 In CT + 2 3 In CR
(a) What is the marginal utility of T-shirts?
(b) What is the marginal utility of rice?
Transcribed Image Text:China and the US produce t-shirts and rice using labour only. Production functions and labour endowments of the two economies are given below: China: QT = 2LT QR = 2LR LT + LR = 200 United States: QT * = 5L * T QR* = 10L * RL T+L * R = 100 Suppose that the utility function for each worker in each country is the same, and given by: U(CT , CR) = 13 In CT + 2 3 In CR (a) What is the marginal utility of T-shirts? (b) What is the marginal utility of rice?
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