View the step-by-step solution to:


[6 points] Consider the Ricardian model with two economies (Mexico and the U.S.A.) and two commodities (goods and

services). The marginal products of labor for each commodity are as follows: Services Goods Mexico │ MPL*S = 1/4 MPL*G = 1/2 U.S.A. │ MPLS = 1 MPLG = 1 Assume the two economies are closed and prices of Services are: pS = $2, and p*S = 12 pesos. (a) Calculate the autarky price of Goods in both countries: pG, and p*G. (b) Calculate wages in both industries in both countries: WG, W*G, WS, and W*S.

Top Answer

The Ricardian model is the model of international trade and it... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question