You are given the information shown in the table about production relationships in Singapore and the rest of the world. Inputs per Unit of Cloth Output Singapore 75 Rest of the world 50 Inputs per Unit of Rice Output Singapore 100 Rest of the world 50 You make several Ricardian assumptions: These are the only two commodities, there are constant ratios of input to output whatever the level of output of rice and cloth, and competition prevails in all markets. i) If no international trade is allowed, what price ratio would prevail between rice and cloth within Singapore. ii) If free international trade is opened up, what goods will Singapore export? Import?

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You are given the information shown in the table about production relationships in Singapore and the rest of the world.

 

Inputs per Unit of Cloth Output

Singapore 75

Rest of the world 50

 

Inputs per Unit of Rice Output

Singapore 100

Rest of the world 50

 

You make several Ricardian assumptions: These are the only two commodities, there are constant ratios of input to output whatever the level of output of rice and cloth, and competition prevails in all markets.

i) If no international trade is allowed, what price ratio would prevail between rice and cloth within Singapore.

ii) If free international trade is opened up, what goods will Singapore export? Import?

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