Compute the equilibrium price of good

Reference no: EM133710462

Question Consider two countries, Home and Foreign, which are closed to international trade. Home has LH=1,170 units of labor available, and Foreign has LF=(0.8)*(1,170) units of labor. Both countries can produce two goods, good 1 and good 2. Home's unit labor requirement in good 1 production is 9, while in good 2 production is 4. Foreign's unit labor requirement in good 1 production is 3, while in good 2 production it is 6. Assume that both countries trade with each other and that the world relative demand (RD) takes the following form: (Demand for good 1)/(Demand for good 2) = (11)/[(Price of good 1)/(Price of good 2)]. Assume that the two countries cannot trade. Compute the equilibrium price of good 1 in terms of good 2 at Home and Foreign, assuming that consumers in each country like to consume both goods. Explain how you determined this equilibrium price.

Reference no: EM133710462

Questions Cloud

What included in nurse practitioners differential diagnosis : A 60 year old patient who smokes and has hypertension reports. What should be included in the nurse practitioners differential diagnosis for this patient.

Deviate from their long-run equilibrium values : Deviate from their long-run equilibrium values in the short run or in the long run is referred to as a Group of answer choices deviation. shock. standard

Discuss where you think you may end up in your golden years : There are significant differences between Long term care facilities, skilled nursing. Discuss where you think you may end up in your golden years and why.

Leading to a higher nominal interest rate : Dynamic model of money, an increase in the price level causes an increase in money demand, thus leading to a higher nominal interest rate

Compute the equilibrium price of good : Compute the equilibrium price of good 1 in terms of good 2 at Home and Foreign, assuming that consumers in each country like to consume both goods

Describe relationships among mission vision and philosophy : Describe the relationships among the mission, vision, and philosophy. Provide a summary of the organization's mission, vision and philosophy with correlation.

What are the strengths and weaknesses of this model : What are the strengths and weaknesses of this model? What other models did you consider most closely and why? Do you think the model you chose is completely

Explain the legislative power of the state parliaments : Explain the legislative power of the State Parliaments. You may use NSW as your model rather than explaining the power of all six State Parliaments.

Derive an expression for the market demand for pizza slices : Derive an expression for the market demand for pizza slices, assuming that Alex and Billy are the only consumers of pizza.

User Account

All Pages