1. Assume that Home and Foreign produces two goods (apple and banana) using only labor in...

 

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1. Assume that Home and Foreign produces two goods (apple and banana) using only labor in production. Assume that markets are perfectly competitive, and using the the information below to answer the following questions. W = 16 Home TABLE 1. THE NO-TRADE EQUILIBRIUM Wb =? MPL 4 MPL =? P =? = P = 4 Foreign W =? W = 12 MPL = MPL = 1 P = 4 P =? a. Complete the missing values for Home. What is the no-trade relative price of apple in Home? b. Complete the missing values for Foreign. What is the no-trade relative price of apple in Foreign? c. Which country has a comparative advantage in production of apple? Why? d. Suppose the world relative rpice of apple is 0.7. Which good will each country export? Briefly explain. 1. Assume that Home and Foreign produces two goods (apple and banana) using only labor in production. Assume that markets are perfectly competitive, and using the the information below to answer the following questions. W = 16 Home TABLE 1. THE NO-TRADE EQUILIBRIUM Wb =? MPL 4 MPL =? P =? = P = 4 Foreign W =? W = 12 MPL = MPL = 1 P = 4 P =? a. Complete the missing values for Home. What is the no-trade relative price of apple in Home? b. Complete the missing values for Foreign. What is the no-trade relative price of apple in Foreign? c. Which country has a comparative advantage in production of apple? Why? d. Suppose the world relative rpice of apple is 0.7. Which good will each country export? Briefly explain.