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Exercise sheet 1 [1D points] mu. no points] Germany can produce two goods {cars and laptops}. Germany has 5m labor units {LU} available and needs 10 LU to produce one car and 2i] LU to produce one laptop. The USA has moo labor units [LUJ available. To produce one car 1D LU are required. to produce one laptop also 10 LU are required. a} [1 point] Does the USA have a comparative andl'or an absolute advantage in the production of any good? If so, in which one? bl [3 points] Graph Germany's production possibility frontier. c} [3 points] Construct the world relative supply curve. Include all relevant numbers and label the axes. d1 [1 point] What pattern of trade does the Ilicardian model predict for Germany and the USA ifthe relative equilibrium price is PlcarlfPllaptopl : 0.?5? Exercise 2 [5 points] Anecdotal evidence suggests that if you wanted to buy ooconut mill: in May 202i], you may have had to visit several supermarkets to satisfy your demand. (\"for an explanation for this observation, applying insights from the gravity model and from the Ricardo model. Exercise 3 [5 points] The gure below depicts the world market for telephones, as currently served by country A. What can be said about the production of telephones? Suppose that oountry B intends to develop the industry to produce telephones. and wants to shut down imports of telephones while developing its infant industry. Add graphs to the figure to depict a situation in which the protection of the industry is necessary and sucoessful to take over the world market. Explain! Price cost {per unit of telephonel At]. Demundwmd Quantity of telephones Produced and demanded