Question
In: Economics
Consider the following Ricardian Model with 2 economies: Germany Portugal Labor Supply 200 workers 200 workers...
Consider the following Ricardian Model with 2 economies:
|
Germany |
Portugal |
|
|
Labor Supply |
200 workers |
200 workers |
|
Wine |
1000 units/worker |
800 units/worker |
|
Beer |
400 units/worker |
300 units/worker |
(d) Show graphically that Germany gains from trade. Carefully label your graph.
(e) Which country has higher wages? What determines the real wage at the national level? Explain.
(f) Calculate real wages in France in autarky and free trade? How do real wages change in France after opening to free trade? (Hint: Assume a international relative price of wine that makes sense in this model)
Solutions
Rahul Sunny answered 1 month agoRelated Solutions
Consider the following Ricardian model. MPL Labor Supply Pens
Consider the following Ricardian model.
MPL
Labor Supply
Pens
Pencils
France
1/10
1/15
90
Germany
1/12
1/20
120
Answer the following questions and show your steps. For the
T/F questions, please explain why they are T/F.
assume that under free trade, the relative price of pens
equals 0.65; i.e.
PpensT/PpencilsT =
0.65.
11. Draw the CPF for France, and label your picture. You can
draw a new picture, or in the same picture as 1 above. What...
Consider the following Ricardian model. MPL Labor Supply Pens
Consider the following Ricardian model.
MPL
Labor Supply
Pens
Pencils
France
1/10
1/15
90
Germany
1/12
1/20
120
Answer the following questions and show your steps. For the
T/F questions, please explain why they are T/F.
1. Draw the PPF for France. Label your picture, and
calculate the slope of the PPF, (4 points)
2. France has the absolute advantage in both goods.
3. France has the comparative advantage in pens.
4. If the labor supply increases...
Consider the following production data for England and Portugal. England Portugal Labor force 25 200 Number...
Consider the following production data for England and
Portugal.
England
Portugal
Labor force
25
200
Number of bottles of wine
per worker
40
50
Number of wheels of cheese
per worker
4
1
(a) Which country has an absolute advantage in the production of
each good? Which country
has a comparative
advantage in the production of each good?
(b) Suppose prices/wages are in terms of wine. Assuming each
country spends 50% income on cheese and 50% on...
Consider the labor discipline model. According to the model, workers supply (extra) effort to make sure...
Consider the labor discipline model. According to the model,
workers supply (extra) effort to make sure that they can keep a job
that generates an employment rent. Explain in a few words how the
following factors affect employment rent.
(a) Unemployment benefits paid for a shorter duration of
time.
(b) Announcement that the plant where you work currently will
close after six months.
(c) A decline in the demand for the product that your company
sells
(d) The departure of...
The “worker misperception model” focuses on labor supply (workers offering their labor for hire) and sticky...
The “worker misperception model” focuses on labor supply
(workers offering their labor for hire) and sticky expectations
about the price level (Pe). Explain how expected real wages
(expected by labor suppliers) ultimately determines the
equilibrium amount of labor hired.
Illustrate with a labor market graph.
Ricardian Model of Trade – Consider the followin
Ricardian Model of Trade –
Consider the following 2 X 2 Ricardian model of trade:
Output per labour-hour
Nation
Wheat
(metric tonnes)
Cloth
(metres)
Canada
6
4
U.K.
1
3
Who has the absolute advantage in wheat? Explain. (
2 marks)
Canada, because it can produce more wheat
Who has the absolute advantage in cloth?
Explain. ( 2 marks)
Canada. It can produce more
cloth.
Who has the comparative advantage in wheat? Explain (
2.5 marks)
Canada -...
In the framework of the Ricardian Model of International Trade, prove that if a country’s workers...
In the framework of the Ricardian Model of International Trade,
prove that if a country’s workers earn a wage rate that is twice as
high as that of another country, then it is because its workers are
twice as productive. We know that American workers earn higher
wages than Chinese workers do. Why do you think American workers
are more productive than Chinese workers?
Ricardian Model with Technological Progress: Consider the Ricardian model of trade. Two countries, Paraguay and Uruguay,...
Ricardian Model with Technological Progress: Consider the
Ricardian model of trade. Two countries, Paraguay and Uruguay,
produce two goods, Beef (B) and Soybeans (S), using only labor.
Paraguay can produce one tonne of Beef with 3 units of labor and
one tonne of Soybeans with 3 units of labor. Uruguay can produce
one tonne of Beef with 2 units of labor and one tonne of Soybeans
with 3 units of labor. Both countries are endowed with a labor
force of...
Consider the predictions of the HO model and the Ricardian model of trade with regard to...
Consider the predictions of the HO model and the Ricardian model
of trade with regard to overall gains from trade, specialization,
and distribution of income generated.
Consider the following data for two countries: England and Portugal: Output per Unit of Labor &nbs
Consider the following data for two countries: England and
Portugal:
Output per Unit of Labor
Wine
(barrels)
Cloth (yards)
England
4
8
Portugal
4
4
Which country, if either, country has an absolute advantage in
producing Wine? Cloth? Explain.
Construct a table indicating the opportunity costs for each
good in each country.
Which country, if either, has a comparative advantage in
producing Wine? Cloth? Explain.
Would Ricardo expect trade to develop between these two
countries if no tariffs are...
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