Business, 19.09.2019 05:30 Amyra2003

Home foreign marginal products cheese wine labor force 100 200 several questions require drawing graphs. in these cases you should graph carefully, either using graph paper, a computer, or if you graph by hand, a ruler to show exact amounts on the vertical and horizontal axes. a. which country has an absolute advantage in producing cheese? which country has an absolute advantage in producing wine? b. which country has a comparative advantage in producing cheese? which country has a comparative advantage in producing wine? c. what is relative price of wine (pw/pc) in the home country without trade? what is relative price of wine (pw/pc) in the foreign country without trade? d. draw the production possibilities frontier for both the home country and the foreign country. draw cheese on the vertical axis and wine on the horizontal axis. show numerical values for the vertical and horizontal intercepts. e. suppose the price of wine (pw) in the home country before trade is equal to 4. what is the price of cheese? what is the wage (w)? now assume trade. assume that the relative price of wine after trade is equal to .8. assume that the home country consumes 240 unit of cheese after trade. f. draw the consumption possibilities frontier for both the home country and the foreign country. again show numerical values for the vertical and horizontal intercepts. g. which good will the home country export? what is the quantity of its exports? h. which good will the home country import? what is the quantity of its imports? i calculate the real wage in the home country in terms of wheat both before and after trade. j. calculate the real wage in the home country in terms of cloth both before and after trade. k. suppose the relative price of wine increases from .8 to 1. what effect will this have on home country's utility (increase, decrease or no change)? what effect will this have on foreign country's utility (increase, decrease or no change) ? 1. assuming the values of the marginal products at the beginning of the problem, and assuming that relative price of wine is equal to one, calculate the relative wage between the two countries (w/w*).

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