Consider the following data from two countries, called Green and Orange, from the Table below. Assume...

 

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Consider the following data from two countries, called Green and Orange, from the Table below. Assume that individuals in both countries spend 50% of their income on good 1 and 50% of their income on good 2. Assume that good 2 is the numraire, and that both goods are divisible (you can purchase fractions of either good). Green Orange Labor force 100 100 Number of good 1 one worker can produce 5 20 Number of good 2 one worker can produce 10 5 a) In autarky (no trade), what is the relative price of a good 1 (i.e., in terms of good 2) in the Green and Orange countries? b) Does either country have an absolute advantage? c) Does either country have a comparative advantage? d) In autarky (no trade), how many units of good 1 and good 2 do individuals in the Green and Orange countries consume? e) Under free trade (and assuming both countries completely specialize if they have a comparative advantage) how many units of good 1 and good 2 do individuals in the Green and Orange countries consume? Consider the following data from two countries, called Green and Orange, from the Table below. Assume that individuals in both countries spend 50% of their income on good 1 and 50% of their income on good 2. Assume that good 2 is the numraire, and that both goods are divisible (you can purchase fractions of either good). Green Orange Labor force 100 100 Number of good 1 one worker can produce 5 20 Number of good 2 one worker can produce 10 5 a) In autarky (no trade), what is the relative price of a good 1 (i.e., in terms of good 2) in the Green and Orange countries? b) Does either country have an absolute advantage? c) Does either country have a comparative advantage? d) In autarky (no trade), how many units of good 1 and good 2 do individuals in the Green and Orange countries consume? e) Under free trade (and assuming both countries completely specialize if they have a comparative advantage) how many units of good 1 and good 2 do individuals in the Green and Orange countries consume?