Let us assume that the world is composed of only two countries let us call themrey....

 

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Let us assume that the world is composed of only two countries let us call themrey. Qquatta and Alemania, in which two products (bicycles and computers) are produced. We are given some basic information on their production functions (see the table) and we assume that this world behaves exactly as predicted by the traditional Ricardian trade model. Alemania Quadia Units of labour per 1 bicycle 3 2 Units of labour per 1 computer 15 16 Assume that consumers in Alemania and Quadia have the same simple Leontief utility function that we have used previously, i.e. that they want to buy 1 bicycle per one computer. We also know that Quadia has 3600 units of labour in total. If the two countries start trading, the world prices would settle at 6 bicycles per 1 PC. Which of the following options correctly describes the autarky and free trade production and consumption equilibrium of this economy? a. Free trade production in Quadia: 1800 bicycles, 0 computers. b. Free trade production in Quadia: 200 bicycles, 0 computers. OC Autarky "consumption" in Quadia: 150 bicycles, 150 computers. d. Autarky production in Quadia: 200 bicycles, 200 computers. e. Free trade production in Quadia: 0 bicycles, 100 computers. Let us assume that the world is composed of only two countries let us call themrey. Qquatta and Alemania, in which two products (bicycles and computers) are produced. We are given some basic information on their production functions (see the table) and we assume that this world behaves exactly as predicted by the traditional Ricardian trade model. Alemania Quadia Units of labour per 1 bicycle 3 2 Units of labour per 1 computer 15 16 Assume that consumers in Alemania and Quadia have the same simple Leontief utility function that we have used previously, i.e. that they want to buy 1 bicycle per one computer. We also know that Quadia has 3600 units of labour in total. If the two countries start trading, the world prices would settle at 6 bicycles per 1 PC. Which of the following options correctly describes the autarky and free trade production and consumption equilibrium of this economy? a. Free trade production in Quadia: 1800 bicycles, 0 computers. b. Free trade production in Quadia: 200 bicycles, 0 computers. OC Autarky "consumption" in Quadia: 150 bicycles, 150 computers. d. Autarky production in Quadia: 200 bicycles, 200 computers. e. Free trade production in Quadia: 0 bicycles, 100 computers.

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F Step 1 Given Unit of labor per 1 bicycle 3 2 Alemania Quadia Quadia has 3600 units of labor And ha... View the full answer