Consider the following situations: Situation A Unit labor requirement       Situation B   Unit labor requirement     Good 1 Good 2   Total # hours     Good 1 Good 2 Total # hours Country 1 36 4 3600   Country 1 2 12 2400 Country 2 20 15 3000   Country 2 10 5 2400    In both situations answer the following questions: Which country should specialize in the production of Good 1? How much should each country produce in the situation without trade if each one split their resources equally between the sectors? Show that if both countries decide to specialize in their” most efficient sector” then the total production increases

Subject:EconomicsPrice: Bought3

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Consider the following situations:

Situation A	Unit labor requirement				Situation B	Unit labor requirement
	Good 1	Good 2	Total # hours			Good 1	Good 2	Total # hours
Country 1	36	4	3600		Country 1	2	12	2400
Country 2	20	15	3000		Country 2	10	5	2400

 

 In both situations answer the following questions:

1. Which country should specialize in the production of Good 1?
2. How much should each country produce in the situation without trade if each one split their resources equally between the sectors?
3. Show that if both countries decide to specialize in their” most efficient sector” then the total production increases.
4. Which is the range of the possible international prices of Good 1 in terms of good 2 for both countries to benefit from trade?