In a 2-country, 2-good model, we assume the 2 states-Futland and Tandam share a common currency,...

 

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In a 2-country, 2-good model, we assume the 2 states-Futland and Tandam share a common currency, they both have the same wages, and they both produce two goods: bicycles and boots. The units of labour requirement are shown below, assuming constant returns to scale. Production Techniques: Units of labour hour required per unit output Tandam Futland 90 hours 30 hours Bicycles Boots 120 hours 50 hours Based on the table above, Futland has an absolute advantage in both goods and a comparative advantage in Boots (and Tandam has a comparative advantage in Bicycles). Indicate whether the above statement is True or False, AND with a couple of sentences explain why. In a 2-country, 2-good model, we assume the 2 states-Futland and Tandam share a common currency, they both have the same wages, and they both produce two goods: bicycles and boots. The units of labour requirement are shown below, assuming constant returns to scale. Production Techniques: Units of labour hour required per unit output Tandam Futland 90 hours 30 hours Bicycles Boots 120 hours 50 hours Based on the table above, Futland has an absolute advantage in both goods and a comparative advantage in Boots (and Tandam has a comparative advantage in Bicycles). Indicate whether the above statement is True or False, AND with a couple of sentences explain why.

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The detailed answer for the above question is provided below True Futland has a lower labour hour re... View the full answer