Assume that shoes are a labor-intensive good, and computers are capital-intensive. When H trades, it is with country F. Use the graph above to answer the following.

a) What was the pre-trade consumption/production of shoes and computers?

b) Describe the trade flows between Countries H and F.

c) What is the price ratio (Pc/Ps) at which free trade occurs?

d) Compared to Country H, Country F is relatively _______ abundant and has a comparative advantage in producing _____. 

e) What happens to wages in Country H after trade? Briefly justify your answer.

 

Transcribed Image Text:

Shoes 500 225 U. 150 DI 175 200 300 Computers Shoes 500 225 U. 150 DI 175 200 300 Computers

Answer rating: 100% (QA)

As per the requirement of the above question the answer is below A The pretrade consumptio... View the full answer