Example2

Example2 - c. What are the exchange rate limits? d. If the...

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ECON 460: Example 2 Consider the following table showing the labor requirements to produce clothing and corn in  China and USA. Wage Clothing Corn USA $7/hr 1 hr 1 hr China 8 yuan/hr 3 hrs 8 hrs Assume that the exchange rate is $1 = yuan 6 a. What is the direction of trade for each of the two commodities? b. What are the limits to the wage rate in each country, other things being equal?
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Unformatted text preview: c. What are the exchange rate limits? d. If the following three commodities are included, what will the export and import pattern be? Shoes PCs Cheese USA 2 hr/pr 50 hr/PC 1 hr/pack China 6 hr/pr 100 hr/PC 10 hrs/pack e. What will happen to the pattern of trade if a transportation charge of 1 hour/commodity is taken into consideration?...
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Example2 - c. What are the exchange rate limits? d. If the...

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