Suppose the world is composed of countries A and B, with endowments (KA, LA) and (K. L), respectively, If these countries trade freely with each other, which of the following statements is correct? (KA, LA) K, PW Qy =,1 Ky • (K® , LB) 1/r PQx 1 1/w O Workers in A will lose purchasing power if the country decides to cut itself off from the rest of the world and become autarkic. O Awill import good X from B. O The wage rate will be higher in A because it has more capital more worker. O None of the options are correct. O These countries will not trade, since they are both in the same cone of diversification.

Suppose the world is composed of countries A and B, with endowments (KA, LA) and (K. L), respectively, If these countries trade freely with each other, which of the following statements is correct? (KA, LA) K, PW Qy =,1 Ky • (K® , LB) 1/r PQx 1 1/w O Workers in A will lose purchasing power if the country decides to cut itself off from the rest of the world and become autarkic. O Awill import good X from B. O The wage rate will be higher in A because it has more capital more worker. O None of the options are correct. O These countries will not trade, since they are both in the same cone of diversification.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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