Reference no: EM133064274
Consider the single-factor production function, Y = AL, for islands A and B. Each island has 100 units of labor (and they cannot move across islands). Island A can produce one unit of agricultural product with 4 units of labor and can produce one unit of electronic product with 2 units of labor (i.e., A is 1/4 for agriculture and 1/2 for electronics). Island B can produce one unit of agricultural product with 5 units of labor and produce one unit of electronic product with 4 units of labor (i.e., A is 1/5 for agriculture and 1/4 for electronics). People on both islands must consume both goods, for example, if no agricultural product is produced, its price will go to infinity. Assume the two islands can trade with each other at no cost. Please note that Island A and A (in italics) are different, with the latter representing (in this production function) the amount of labor effort required to make one or the other goods.
(a) What are A's and B's respective comparative advantages?
(b) Please calculate the range of the possible relative prices (pa/pe) for the two kinds of goods.
(C) Letting Pa/pe = 1.5, show how many units of each product people will produce on each island
(d) Using the relative price above, calculate the relative wage for Islands A and B, wa/WB.
(e) Each unit of labor needs to consume unvaryingly 0.1 unit of agricultural production, and as many electronic products as possible. Use the relative price above, calculate and compare the electronic product people on each island can consume with and without trade.
(f) Island A is more productive (uses less labor) in the production of both goods compared to Island B. In one sentence, why would A and B trade with each other under these circumstances?
|
What is irr
: If a project requires an initial investment of $25,000 and then is sold for $42,000 after five years, what is its NPV at an interest rate of 6 percent? What is
|
|
Calculate the cost per pencil produced in august
: Calculate the cost per pencil produced in August - Determine the cost of goods completed during the month and cost of the WIP inventory on 31March
|
|
Pros and cons of completing stakeholder analysis
: Discuss the pros and cons of completing a stakeholder analysis. Explain why stakeholder analysis is an important step in the action research process
|
|
What is the current recidivism rate in state
: What is the current recidivism rate in your state? What has been the trend in the recidivism rate in your state?
|
|
Respective comparative advantages
: Consider the single-factor production function, Y = AL, for islands A and B. Each island has 100 units of labor (and they cannot move across islands). Island A
|
|
Demand for daraprim to be elastic or inelastic
: In August 2015, Turing Pharmaceuticals raised the price of Daraprim from $13.30 a tablet to $750, an increase of 5,456 percent (Over and Silverman 2015). Darapr
|
|
Moving the maisenbacher house
: What is the role of the City of Springfield in the Maisenbacher case? What are the goals of the city? How will you know if government is effective?
|
|
What is the balance in Utilities Payable as of December
: The company's bank loans ($1,500,000) are all due on June 30, 2023. What is the balance in Utilities Payable as of December 31, 2022
|
|
Short-run cost and the long-run cost
: We are in the fourth Industrial Revolution era which is known as industry 4.0 using big data and artificial intelligent (AI). Like all revolutions, this one has
|