question archive Assume there are two countries (home vs
Assume there are two countries (home vs
Subject:EconomicsPrice: Bought3
Assume there are two countries (home vs. foreign) and three goods in the world. The following table reports relative home productivity for each good. Assume equilibrium relative home wage per hour is 3 under trade. Relative home productivity Apple Phone Shoe a b ? Choose the numerical values for a > 0, b>0 and c> 0 yourself such that a #b* c. Clearly indicate the values you choose. Two different students choosing the same values would be thought of as cheating. Then answer the following questions. (a) Does home country have absolute advantage in producing any of the goods? If yes, which goods? Explain briefly. (9 points) (b) Does foreign country have comparative advantage in producing any of the goods? If yes, which goods? Explain briefly.
