QUESTION 1In the following Classical-type table showing laborrequirements per unit of output for each of the fivecommodities in Zambia and Swaziland, assume that the wagerate in Zambia is 2 Kwachas (2K) per day, the wage rate inSwaziland is R4 per day, and the exchange rate is K1=R1.Good AGood BGood CGoodGood E14 day6 days8 daysZambia7 days15 days20 daysSwaziland2 days43 days3 daysdaysUsing the above information answer the following questions:a) Is trade between the two countries likely to occur and, if so,which goods will each country be exporting or importing? Explainb) Assume that the wage rate in Zambia is 5K/ day and exchangerate (e) is 0.5(that is 1K =R0.5); determine the upper and lower toZambia wage rate limits.c) Suppose there is an improvement in productivity (lowering thelabour requirements by 1 day) in Swaziland. Is there still be a basisfor trade between these 2 countries, and why?

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Answered: In the following Classical-type table…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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