Suppose that in the absence of transportation costs Home specializes in coffee and coal while Foreign specializes in cars and corn. Cigars are produced in both countries and are thus a nontraded good. From the data in the accompanying table it can be deduced that Home's relative wage (w/w*) is. (Enter your response as an integer.) If both coal and cars become nontraded goods after transportation costs are included in the analysis, it must be the case that those costs, as a percentage of production costs, are at least O A. 150 percent. B. 50 percent. O C. 100 percent. OD. 200 percent. Good Coffee Coal Cigars Cars Corn Relative Home Productivity Advantage * (aLilaLi) 8 6 2 0.67 0.2

Suppose that in the absence of transportation costs Home specializes in coffee and coal while Foreign specializes in cars and corn. Cigars are produced in both countries and are thus a nontraded good. From the data in the accompanying table it can be deduced that Home's relative wage (w/w) is. (Enter your response as an integer.) If both coal and cars become nontraded goods after transportation costs are included in the analysis, it must be the case that those costs, as a percentage of production costs, are at least O A. 150 percent. B. 50 percent. O C. 100 percent. OD. 200 percent. Good Coffee Coal Cigars Cars Corn Relative Home Productivity Advantage (aLilaLi) 8 6 2 0.67 0.2

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.8P

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Question

Suppose that in the absence of transportation costs
Home specializes in coffee and coal while Foreign
specializes in cars and corn. Cigars are produced in
both countries and are thus a nontraded good.
From the data in the accompanying table it can be
deduced that Home's relative wage (w/w*) is.
(Enter your response as an integer.)
If both coal and cars become nontraded goods after
transportation costs are included in the analysis, it
must be the case that those costs, as a percentage of
production costs, are at least
O A. 150 percent.
B. 50 percent.
O C. 100 percent.
O D. 200 percent.
Good
Coffee
Coal
Cigars
Cars
Corn
Relative Home
Productivity Advantage
(alai)
8
6
2
0.67
0.2

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