Relative demand schedule to your diagram

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Reference no: EM1320267

Q. Malaysia has 300 units of labor while there are 500 units of labor in Indonesia. When they
produce, the countries have the subsequent unit labor requirements:

Malaysia Indonesia
Cameras 15 20
Rugs 10 20

(a) Illustrate what is the relative price of rugs to cameras in Malaysia if there is no trade?

(b) Assume that Malaysia also Indonesia are completely specialized when they trade. Which product will Malaysia produce?

(c) Draw the production possibility frontier for Malaysia. If Malaysia only produces the good in which it has a comparative advantage, where will its production point be on the production possibility frontier? If the post-trade world price will be at 1, can you Elucidate how that there are gains from trade?

(d) Does Indonesia benefit from trade when the world price for rugs to cameras is 1? Explain.

(e) Draw a world supply schedule which Elucidate how rug production relative to cameras. Label all axes, curves, intercepts also kink points.

(f) Add a relative demand schedule to your diagram that implies that Malaysia is incompletely specialized.

(g) Give sufficient condition under which both countries benefit from trade if the condition in question g is necessary also sufficient? Explain briefly

Reference no: EM1320267

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