Consider the Ricardian model of trade. There are two goods, smartphones and cars, and they are...

 

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Consider the Ricardian model of trade. There are two goods, smartphones and cars, and they are produced with labour. The production process features constant marginal product of labour in the production of each good. In Belgium, it takes 20 hours of work to produce a car and 5 hours of work to produce a smartphone. 1. What is the marginal product of an hour of work in Belgium for car production? What is the marginal product of labour in smartphone production? (7 Marks) 2. What is the opportunity cost of producing a car in Belgium? (7 Marks) Consider the Ricardian model of trade. There are two goods, smartphones and cars, and they are produced with labour. The production process features constant marginal product of labour in the production of each good. In Belgium, it takes 20 hours of work to produce a car and 5 hours of work to produce a smartphone. 1. What is the marginal product of an hour of work in Belgium for car production? What is the marginal product of labour in smartphone production? (7 Marks) 2. What is the opportunity cost of producing a car in Belgium? (7 Marks)

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1 i The increased output of vehicles that emerges from adding an additional hour of effort to the manufacturing process while keeping all other variab... View the full answer