Econ_181_HW1_S13_Solution

3 indifference curve foreign slope 1 price

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Unformatted text preview: e the equilibrium wage rates. w = Pw/aiw = Pw/2 and w* = Pc/aic* = Pc/6 where Pw and Pc are world prices of wine and cheese, respectively. And, the relative wages are as follows: w/w* = (Pw/aiw)/( Pc/aic*) = (Pw/Pc)( aic*/ aiw) = (15/16)(6/2) = 2.81...
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