1. (22 points). The following table depicts the unit labor requirements for the USA and Brazil...

  

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1. (22 points). The following table depicts the unit labor requirements for the USA and Brazil to produce cloth and food. Unit labor requirement (hours/unit of production) Cloth (Qc) Food (Qf) Canada Brazil (labor supply) L=24 L=24 a. In which product Canada and Brazil have a comparative advantage? In which product each will specialize under free trade (3pts) b. Derive the PPF equation for Canada and Brazil (Cloth, Qc, on the left hand side) and find the maximum production Qcm and Qfm for each country under specialization (4pts). c. Define the price of cloth as Pc, the price of food as Pf, cloth consumption Dc and food consumption as Df. Derive the trade possibility equation. Assume the trade relative price of cloth (Pc/Pf) is equal to 0.4. Derive the trade Consumption frontier (4pts). d. From your results above, comment on the gains from trade. Explain clearly how each country benefits from trade (4pts). e. If with trade Pc-12 and Pf=30 what would be the wage rate in Canada and Brazil (3pts)? f. Discuss in general the argument that says that high wage countries cannot compete fairly with low wage countries and are hurt by trade (4pts). 1. (20 points). The following table depicts the unit labor requirements for the USA and Brazil to produce cloth and food. Unit labor requirement (hours/unit of production) Food (Qf) Canada Brazil Cloth (Qc) alc <= 10 a c=5 a=20 a=15 L (labor supply) L=24 L=24 I a. In which product Canada and Brazil have a comparative advantage? In which product each will specialize under free trade (3pts) b. Derive the PPF equation for Canada and Brazil (Cloth, Qc, on the left hand side) and find the maximum production Qcm and Qfm for each country under specialization (3pts). c. Define the price of cloth as Pc, the price of food as Pf, cloth consumption Dc and food consumption as Df. Derive the trade possibility equation. Assume the trade relative price of cloth (Pc/Pf) is equal to 0.4. Derive the trade Consumption frontier (4pts). d. From your results above, comment on the gains from trade. Explain clearly how each country benefits from trade (4pts). e. If with trade Pc-12 and Pf-30 what would be the wage rate in Canada and Brazil (2pts)? f. Discuss in general the argument that says that high wage countries cannot compete fairly with low wage countries and are hurt by trade (4pts). 1. (22 points). The following table depicts the unit labor requirements for the USA and Brazil to produce cloth and food. Unit labor requirement (hours/unit of production) Cloth (Qc) Food (Qf) Canada Brazil (labor supply) L=24 L=24 a. In which product Canada and Brazil have a comparative advantage? In which product each will specialize under free trade (3pts) b. Derive the PPF equation for Canada and Brazil (Cloth, Qc, on the left hand side) and find the maximum production Qcm and Qfm for each country under specialization (4pts). c. Define the price of cloth as Pc, the price of food as Pf, cloth consumption Dc and food consumption as Df. Derive the trade possibility equation. Assume the trade relative price of cloth (Pc/Pf) is equal to 0.4. Derive the trade Consumption frontier (4pts). d. From your results above, comment on the gains from trade. Explain clearly how each country benefits from trade (4pts). e. If with trade Pc-12 and Pf=30 what would be the wage rate in Canada and Brazil (3pts)? f. Discuss in general the argument that says that high wage countries cannot compete fairly with low wage countries and are hurt by trade (4pts). 1. (20 points). The following table depicts the unit labor requirements for the USA and Brazil to produce cloth and food. Unit labor requirement (hours/unit of production) Food (Qf) Canada Brazil Cloth (Qc) alc <= 10 a c=5 a=20 a=15 L (labor supply) L=24 L=24 I a. In which product Canada and Brazil have a comparative advantage? In which product each will specialize under free trade (3pts) b. Derive the PPF equation for Canada and Brazil (Cloth, Qc, on the left hand side) and find the maximum production Qcm and Qfm for each country under specialization (3pts). c. Define the price of cloth as Pc, the price of food as Pf, cloth consumption Dc and food consumption as Df. Derive the trade possibility equation. Assume the trade relative price of cloth (Pc/Pf) is equal to 0.4. Derive the trade Consumption frontier (4pts). d. From your results above, comment on the gains from trade. Explain clearly how each country benefits from trade (4pts). e. If with trade Pc-12 and Pf-30 what would be the wage rate in Canada and Brazil (2pts)? f. Discuss in general the argument that says that high wage countries cannot compete fairly with low wage countries and are hurt by trade (4pts).

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In which product Canada and Brazil have a comparative advantage In which product each will specialize under free trade 3pts Canada has a comparative advantage in cloth and will specialize in this prod... View the full answer