Consider a Ricardian model with two countries, the US and Ecuador, producing two goods, bananas and machines. Suppose the unit-labor requirements are: US = 4, aLM US = 8, aLB =D4. %3D aLB = 8, aB = 4, aM = 2, aM = 4. Let the US have 3200 workers and Ecuador have 400 workers. A. Which country has the absolute advantage in bananas? Why? B. Which country has the comparative advantage in bananas? Why? C. What is the autarky.terms of trade in the US?

Consider a Ricardian model with two countries, the US and Ecuador, producing two goods, bananas and machines. Suppose the unit-labor requirements are: US = 4, aLM US = 8, aLB =D4. %3D aLB = 8, aB = 4, aM = 2, aM = 4. Let the US have 3200 workers and Ecuador have 400 workers. A. Which country has the absolute advantage in bananas? Why? B. Which country has the comparative advantage in bananas? Why? C. What is the autarky.terms of trade in the US?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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