Assume there are two countries, one rich and one poor, and the only goods they produce...

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Assume there are two countries, one rich and one poor, and the only goods they produce are computers and ice cream. Computers are tradable and ice cream is not. The rich country produces 12 units of computers and 4 units of ice cream per capita, the poor country 3 units of computers and 1 unit of ice cream per capita. In the rich country, the price of computers is 2 and the price of ice cream is 4 (in the currency of the rich country). In the poor country, the price of both computers and ice cream is 1 (in the currency of the poor country). (a) Compute the GDP per capita in the home currency in each country. (b) Determine the market exchange rate between the two currencies. What is the ratio of GDP per capita between the two countries based on the market exchange rate? Assume there are two countries, one rich and one poor, and the only goods they produce are computers and ice cream. Computers are tradable and ice cream is not. The rich country produces 12 units of computers and 4 units of ice cream per capita, the poor country 3 units of computers and 1 unit of ice cream per capita. In the rich country, the price of computers is 2 and the price of ice cream is 4 (in the currency of the rich country). In the poor country, the price of both computers and ice cream is 1 (in the currency of the poor country). (a) Compute the GDP per capita in the home currency in each country. (b) Determine the market exchange rate between the two currencies. What is the ratio of GDP per capita between the two countries based on the market exchange rate?

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