I have attached the questions below. They are related to the Ricardian Model of Trade.

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I have attached the questions below. They are related to the Ricardian Model of Trade.
	
Document Preview: International Economics Chapter 2 Problem Set   Name: _________________________________ 
 
Assume that Home and Foreign produce 2 goods, High-Definition televisions and kiwi fruit.  Use the following 
information to answer the questions. 
a) The Home Country is endowed with 10 workers and has the following marginal products: MPL = 2, MPL = 4. 
TV K
Illustrate the Home country’s PPF, placing televisions on the x-axis.  Fully label your graph. (2 pts)

b) The Foreign Country is also endowed with 10 workers and has the following marginal products: MPL* =1, 
TV
MPL* =3. Illustrate the Foreign country’s PPF, placing televisions on the x-axis.  Fully label your graph. (2 pts) 
K

c) What is the no-trade relative price of TVs in each country? (2 pts)d)  Predict the pattern of trade if the world relative price for televisions is P /P = XXXXXXXXXXpts) 
TV K

e) What has happened to the real wage for Home country workers? (Be specific) (2 pts)

David · Accepted Answer

International Economics Chapter 2 Problem Set Name: _________________________________ 
Assume that Home and Foreign produce 2 goods, High-Definition televisions and kiwi fruit. Use 
the following information to answer the questions. 
a) The Home Country is endowed with 10 workers and has the following marginal products: 
MPLTV = 2, MPLK = 4. Illustrate the Home country’s PPF, placing televisions on the x-
axis. Fully label your graph. (2 pts). 
At home, maximum of 20 High definition TVs can be produced when all resources are used in 
the car industry 
At home, maximum of 40 kiwi fruit can be produced when all resources are used in the kiwi fruit 
production 
The absolute value of the slope of the PPF gives the opportunity cost of  TVS in terms of Kiwi 
fruits , and equals the relative price of  TVS  in terms of kiwi fruits , i.e. PK/PTV = – 
(MPLK/MPTV) = – 40/20=-2.

I have attached the questions below. They are related to the Ricardian Model of Trade. Document Preview: International Economics Chapter 2 Problem Set Name: _________________________________ Assume...

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