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Unit L… Show more Let unit labor requirements for producin

Paper help Economics Unit L… Show more Let unit labor requirements for producin

Economics

Unit L… Show more Let unit labor requirements for producin

Unit L… Show more Let unit labor requirements for producing wheat and cloth in the U.S. and Mexico be Unit Labor Requirements: U.S. Mexico Wheat 4 2 Cloth 1 3 Labor Endowments: U.S. Mexico Labor 240 120 Suppose also that consumers in both countries insist on consuming equal number of units of both goods regardless of price. Determine the autarky equilibrium quantities of both goods and the autarky relative prices of cloth in terms of wheat in the U.S. and Mexico. Draw the world relative demand and supply curves. Determine the free trade equilibrium quantities of both goods produced and consumed in both countries; the free trade quantities of trade; and the free trade equilibrium price. How will the patterns of production, consumption, and trade be affected if the labor endowment of Mexico grows to 240? Let ww and wc be the wages of labor specified in units of wheat and cloth respectively. Calculate the wages in both of these terms for both of the countries for each of the equilibria examined above, i.e., autarky, free trade with initial labor endowment, and free trade with Mexico labor endowments of 240. • Show less

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