QUESTION 5 There are two countries: A and B. Here, we consider the trade equilibrium with transportation costs. There are four homogeneous goods and one input (labor). Unit labor requirements are given in the following table. In addition, the free-trade wage rate in A is $1, and that in B is $2. Finally, we assume it costs $2 to transport goods from the other country. Which product(s) will not be traded between the two countries? Units of labor required per unit of output A 9 7 5 3 Textile Fish Soybean Com B 2 3 3 4

QUESTION 5 There are two countries: A and B. Here, we consider the trade equilibrium with transportation costs. There are four homogeneous goods and one input (labor). Unit labor requirements are given in the following table. In addition, the free-trade wage rate in A is $1, and that in B is $2. Finally, we assume it costs $2 to transport goods from the other country. Which product(s) will not be traded between the two countries? Units of labor required per unit of output A 9 7 5 3 Textile Fish Soybean Com B 2 3 3 4

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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