ECO369 International Economic IssuesGVSU, Wei SunHomework 1 Chapter 2. Preliminaries of Trade Models(Due: Thursday, 9/16, for TR class; Monday, 9/20, for M class)General Instructions:Write your answers clearly on Letter size paper (8 x 11.5). Mark the order of the questions. Please do NOT copy the questions. 1.If PNike shoes= $100; PFubu shoes= $50, what is the relative price of Nike shoes in terms of Fubu shoes?2.If the relative price of work-boots in terms of casual shoes is 2. At current production point along the PPF, the opportunity cost of producing work-boots in terms of casual shoes is 1. How will production of the two types of shoes change? 3.Draw a budget line for a farmer with an endowment of 15 bushels of corn, assuming the relative price of corn is 3 bushels of wheat. (Place corn on the horizontal axis and wheat on the vertical axis.) a) What is the slope of your BL? b) What will happen to the farmer’s BL if the relative price is 4 instead of 3, all else the same? c) What if his endowment is 20 instead of 15, if the relative price stays at 3?
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