Which countrys labor has the higher average real wage

Assignment Help Financial Management

Reference no: EM131210947

The real wage is the purchasing power of one hour of labor. That is, for each product it is the number of units of the product that a worker can buy with his earnings from one hour of work. In a Ricardian model, for any product actually produced by the worker, the worker is simply paid according to her productivity (units of output per hour). This is then her real wage in terms of this product. In your answer to this question, use the numerical example from the section on Ricardo's theory of comparative advantage.

a. With no trade, what is the real wage of labor with respect to each good in the United States? In the rest of the world? Which country's labor has the higher "average" real wage?

b. With free trade and an equilibrium price ratio of 1 W/C , each country completely specializes. What is the real wage with respect to wheat in the United States?

By using international trade to obtain cloth, what is the new value of the real wage with respect to cloth in the United States?

What does this tell us about gains from trade for the United States?

What is the real wage with respect to cloth in the rest of the world?

By using international trade to obtain wheat, what is the new value of the real wage with respect to wheat in the rest of the world?

What does this tell us about the gains from trade for the rest of the world?

c. With free trade, which country's labor has the higher "average" real wage? In what sense does absolute advantage matter?

Reference no: EM131210947

Questions Cloud

Which country has an absolute advantage in wine : Which country has an absolute advantage in wine? In cheese? - Which country has a comparative advantage in wine? In cheese?

What are some key elements of googles culture : What are some key elements of Google's culture, and how do they relate to elements of culture mentioned in "How Innovative is Your Company's Culture?" and "GE and the Culture of Analytics"?

Systematic random sampling and stratified random sampling : What is the difference between systematic random sampling and stratified random sampling..

Scores are normally distributed : SAT verbal scores are normally distributed, with a mean of 500 and standard deviation of 100. You randomly select a test taker. What's the probability that s/he scored between 500 and 700?

Which countrys labor has the higher average real wage : With no trade, what is the real wage of labor with respect to each good in the United States? In the rest of the world? Which country's labor has the higher "average" real wage?

Extendible hashing versus linear hashing : Give an example of when you would use each element (A or B) for each of the following ‘A versus B' pairs

Senior citizen suffers from anxiety : (a) Find the probability that a senior citizen suffers from anxiety, given that he or she has sleep disorder. Round your answer to 2 decimal places.

Do personal and business ethics ever overlap : Do you agree with the personal vs. business ethics distinction? Do personal and business ethics ever overlap? Should personal ethics play a role in business ethical decision making?

Ricardos theory of comparative advantage : What is the effect on the pattern of trade predicted by the Ricardian analysis if the number of labor hours required to make a unit of wheat in the United States is reduced by half?

User Account

All Pages