You know the following information about labor productivity (units of output per hour of labor) in a

Question:

You know the following information about labor productivity (units of output per hour of labor) in a country:
A worker can produce 8 units of product V in one hour. A worker can produce 4 units of product Z in one hour.
a. With no international trade, what is the of product Z for this country?
b. The country now opens to free trade, and the equilibrium world price of product Z is 1.5 V/Z. In comparison with no trade, which product will the country shift toward producing more of?
c. For free trade with an equilibrium world price of product Z equal to 1.5 VIZ, is it possible that the labor productivities in the other country (the one that this country trades with) are 6 units of product V per labor hour and 6 units of product Z per labor hour? Why or why not?
Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...