Home unit labor requirements for the production of goods A, B, C, D and E are 8, 4, 10, 4, 6 respectively, while the foreign unit labor requirements for these goods are 12, 16, 20, 24 and 18 respectively. Find: (a) Relative home productivity for all the goods (b) The pattern of specialization if relative home wage is 2.9. (c) Change in pattern of specialization if relative home wage increases to 3.1.
Home unit labor requirements for the production of goods A, B, C, D and E are 8, 4, 10, 4, 6 respectively, while the foreign unit labor requirements for these goods are 12, 16, 20, 24 and 18 respectively. Find: (a) Relative home productivity for all the goods (b) The pattern of specialization if relative home wage is 2.9. (c) Change in pattern of specialization if relative home wage increases to 3.1.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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