Producing one yard of cloth requires 1 worker and 5 acres of land, while producing one pound of food requires 1 worker and 6 acres of land. Both countries have 55 workers: the U.S. has 160 acres of land, while the ROW has 180. The price of food is always $39/pound, the price of cloth is $32/yard in the U.S. in autarky and $35/yard in both countries under free trade.

 

Q1 Compare the relative abundance of factors across countries.

Q2 Compare the relative intensity of factor use across goods.

Q3 Determine the pattern of comparative advantage and the pattern of trade.

Answer rating: 100% (QA)

Q1 Relative Abundance of Factors Across Countries To compare the relative abundance of factors labor ... View the full answer