Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150.If w=2w* , what goods should Home produce? What should Foreign produce? 1. Home has 12,000 units of labor available. It can produce two goods, apples andbananas. The unit labor requirement in apple production is 100, while in bananaproduction is 75. There is now also another country, Foreign, with a labor force of18,000. Foreign's unit labor requirement in apple production is 120, while in bananaproduction is 150.d. If w = 2w*, what goods should Home produce? What should Foreign produce?Explain.

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Answered: Home has 12,000 units of labor…

Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter18: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 2TY

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Question

Home has 12,000 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 100, while in banana production is 75. There is now also another country, Foreign, with a labor force of 18,000. Foreign’s unit labor requirement in apple production is 120, while in banana production is 150.

If w=2w* , what goods should Home produce? What should Foreign produce?

1. Home has 12,000 units of labor available. It can produce two goods, apples and
bananas. The unit labor requirement in apple production is 100, while in banana
production is 75. There is now also another country, Foreign, with a labor force of
18,000. Foreign's unit labor requirement in apple production is 120, while in banana
production is 150.
d. If w = 2w*, what goods should Home produce? What should Foreign produce?
Explain.

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