Question: 3. It is assumed that there exist five different goods production and a,,a,.....as and a a..a, represent the unit labor requirement of domestic and

3. It is assumed that there exist five different goods production and a,,a,.....as and a a..a, represent the unit labor requirement of domestic and foreign countries in respective, and let a,, a,... a, 1, 5, 3,6, 12; a; a a; = 10, 40, 12, 12, 9. If the ratio of domestic and foreign wage is 3, please answer the following question. (a) Pleas explain the comparative advantage and absolute advantage by the logic of unit labor requirement. (b) Please explain which goods home country will import. (c)** (optional) If there exist 100% transport costs, please explain how many goods belong to non-traded goods for domestic country.

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a Comparative advantage is determined by comparing the relative unit labor requirements of different countries The unit labor requirement represents the amount of labor needed to produce one unit of a ... View full answer

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