2. Economics
3. assume that home and foreign produce two goods tvs and...

# Question: assume that home and foreign produce two goods tvs and...

###### Question details

Assume that Home and Foreign produce two goods, TVs and cars, and use the information below to answer the following questions.

 No-Trade Equilibrium Home Foreign wageTV= 12 wageC= ? wage*TV = ? wage*C= 6 aLTV = 0.5 aLC = ? aLTV * = ? aLC* = 1 PTV = ? PC = 4 PTV = 3 PC = ?

a. What is the unit labor requirement for cars in Home?

b. What is the no-trade relative price of TVs in Home?

c. What is the unit labor requirement for TVs in Foreign?

d. What is the no-trade relative price of TVs in Foreign?

e. Suppose that the free trade equilibrium relative price of TVs, is PTV/ PC= 1. Which good will Home export?

f. Which good will Foreign export?