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This exercise applies the basic Ricardian model of one factor and two goods. The table below contains the unt labor requirements in Foreign and Home for each of two goods

This exercise applies the basic Ricardian model of one factor and two goods. The table below contains the unt labor requirements in Foreign and Home for each of two goods

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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This exercise applies the basic Ricardian model of one factor and two goods. The tablo below contains the unit labor requirements in Foreign and Home for each of two goods Whiskey Candy Lc1 hour per pound Home w3 hours per galon. Foreign a5 hours per pound w4 hours per galon where Acnumber of labor hours needed to produce a unit of candy in Home aw number of labor hours needed to produce a unit of whiskey in Home, = number of labor hours needed to produce a unit of candy in Foreign rumber of labor hours needed to produce a unit of whskey in Foreign Po the money price per pound of candy. Pw the money price per pound of whiskey in the absence of trade between Home and Foreign the unt labor requirements given above indicate that the relative price of candy (PPwill be lower in Home Once Home and Foreign engage in trade, the world equilonum relative price of candy (PPw) wil be determined by the In the graphical portrayal of world equilibrium, the relative demand curve of candy is dowward-sloping and the relative supply curve of candy is shaped as OB. a vertical line. OA a dowrward-sioping curve OD. an upward-sloping curve Oc. astep function
Transcribed Image Text:This exercise applies the basic Ricardian model of one factor and two goods. The tablo below contains the unit labor requirements in Foreign and Home for each of two goods Whiskey Candy Lc1 hour per pound Home w3 hours per galon. Foreign a5 hours per pound w4 hours per galon where Acnumber of labor hours needed to produce a unit of candy in Home aw number of labor hours needed to produce a unit of whiskey in Home, = number of labor hours needed to produce a unit of candy in Foreign rumber of labor hours needed to produce a unit of whskey in Foreign Po the money price per pound of candy. Pw the money price per pound of whiskey in the absence of trade between Home and Foreign the unt labor requirements given above indicate that the relative price of candy (PPwill be lower in Home Once Home and Foreign engage in trade, the world equilonum relative price of candy (PPw) wil be determined by the In the graphical portrayal of world equilibrium, the relative demand curve of candy is dowward-sloping and the relative supply curve of candy is shaped as OB. a vertical line. OA a dowrward-sioping curve OD. an upward-sloping curve Oc. astep function
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