ECO369 International Economic Issues GVSU, Wei Sun Homework 2 – Chapter 3 Ricardo Model General Instructions: Write your answers only clearly on Letter size paper. Mark the order of the questions. Please do NOT copy the questions. (Note: HM stands for the textbook “Husted and Melvin”. Some questions are modified based on the HM exercise questions. ) 1. For the unit labor requirement given below, determine the following: a) the autarky relative prices in each country; b) the direction of comparative advantage. A B Soybean 4 9 Textile 2 3 2. Suppose there are 20,000 hours of labor available in country A. 5 hours of labor are required to produce 1 unit of Soybean, while 4 hours are required to produce 1 unit of Textile. a) Find the shape and dimensions of A’s PPF. b) use the following additional data to graph A’s trade triangle: world relative price (of S in terms of T) = 2; A’s imports = 2000; A’s exports = ? 3.
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