Homework Help is Here – Start Your Trial Now!
Business
Accounting
unit labour

unit labour

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
!
The unit labour requirements of the production of cotton are 2 and 3 and for wheat is 4 and 5 for Lincolnland and Smithland, respectively. Labour in Lincolnland and Smithland are taken to be 400 and 200 respectively. (i) If labour is the only factor of production and tastes and preferences of the consumers in both countries are alike and captured by U(C, W)=W^4/5C^1/5, find the relative equilibrium price? Discuss as to whether there is complete specialisation at this relative price? (ii) Assume that the relative equilibrium price of cotton to wheat in the world economy is 4/5, what amount of wheat would each of the countries produce?
Transcribed Image Text:The unit labour requirements of the production of cotton are 2 and 3 and for wheat is 4 and 5 for Lincolnland and Smithland, respectively. Labour in Lincolnland and Smithland are taken to be 400 and 200 respectively. (i) If labour is the only factor of production and tastes and preferences of the consumers in both countries are alike and captured by U(C, W)=W^4/5C^1/5, find the relative equilibrium price? Discuss as to whether there is complete specialisation at this relative price? (ii) Assume that the relative equilibrium price of cotton to wheat in the world economy is 4/5, what amount of wheat would each of the countries produce?
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS