hw1solutions1

# hw1solutions1 - Econ/EEP 181 International Trade Assignment...

This preview shows pages 1–3. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Table 1: Consumption with 1 Unit of Labor Before Trade After Trade with ± P c P w ² w = 1 3 wheat cloth Cloth Wheat Cloth Wheat UK 1/4 1/12 1/4 1/12 USA 1/6 1/4 3/4 1/4 In the table above, boxes are used to denote the goods for which a country has a comparative advantage in the “Before Trade” columns. We know those amounts are produced post trade in each of the countries after trade, and then we convert them into the other good using the relative price of 1/3. This is easily done when we notice the units on the relative price of cloth in terms of wheat. For example, if the US produces 1/4 units of wheat, we perform the following calculation to determine how much cloth they can consume : 1 4 wheat × 3 1 cloth wheat = 3 4 cloth
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 6

hw1solutions1 - Econ/EEP 181 International Trade Assignment...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online