Consider a country that produces computers (C) and food (F) using capital (K) and labor(L). Both industries are perfectly competitive. The factors of production are complements.As a result, unit factor requirements are fixed and given by: aKc = 3, akr = 1, aLc = 2 andALF 4. Suppose that this economy has 100 units of capital and 150 workers.(c) Suppose that the world price of computers is $16 and the world price of food is $12.Assume that the Home country produces both goods. What are the free trade factorprice levels W and R?

Free trade refers to a policy in which governments do not impose tariffs, quotas, or other…

Consider a country that produces computers (C) and food (F) using capital (K) and labor (L). Both industries are perfectly competitive. The factors of production are complements. As a result, unit factor requirements are fixed and given by: akc=3, akF=1, aLc = 2 and aLF = 4. Suppose that this economy has 100 units of capital and 150 workers. (c) Suppose that the world price of computers is $16 and the world price of food is $12. Assume that the Home country produces both goods. What are the free trade factor price levels W and R?

Consider a country that produces computers (C) and food (F) using capital (K) and labor (L). Both industries are perfectly competitive. The factors of production are complements. As a result, unit factor requirements are fixed and given by: akc=3, akF=1, aLc = 2 and aLF = 4. Suppose that this economy has 100 units of capital and 150 workers. (c) Suppose that the world price of computers is $16 and the world price of food is $12. Assume that the Home country produces both goods. What are the free trade factor price levels W and R?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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