Assume a Ricardian model. The following table shows the amount of output produced by each unit...

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Assume a Ricardian model. The following table shows the amount of output produced by each unit of labor in Germany and France and also the amount of labor available in those countries. Wheat (W) Computers (C) France 5 8 Germany 2 4 (a) Under free trade each country completely specializes in the good in which it has comparative advantage. Germany has 90,000 units of labor. Germany consumes 105,000 tons of wheat whether it is in autarky (no trade) or in free trade. Suppose under free trade the terms of trade are 1W = 1.75C. How many computers does Germany gain when its economy moves from autarky to free trade? Assume a Ricardian model. The following table shows the amount of output produced by each unit of labor in Germany and France and also the amount of labor available in those countries. Wheat (W) Computers (C) France 5 8 Germany 2 4 (a) Under free trade each country completely specializes in the good in which it has comparative advantage. Germany has 90,000 units of labor. Germany consumes 105,000 tons of wheat whether it is in autarky (no trade) or in free trade. Suppose under free trade the terms of trade are 1W = 1.75C. How many computers does Germany gain when its economy moves from autarky to free trade?

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In the Ricardian model when countries engage in free trade they specialize in producing goods in whi... View the full answer