Suppose Ireland and Canada produce two goods, Y and X. Assume that good Y is It intensive
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Question:
Suppose Ireland and Canada produce two goods, Y and X. Assume that good Y is It intensive and good X is capital intensive.
a. Given the above PPFs, which country is relatively labor-abundant? Capital-abundant? Explain.
b. Suppose the countries have identical preferences. Show the no-trade equilibrium and the free-trade equilibrium. Be sure to label the production and consumption points for both economies.
Related Book For
International Economics Theory and Policy
ISBN: 978-0273754206
9th Edition
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
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