Question: consider the following ricardian model mpl labor supply pens pencils...
Consider the following Ricardian model.
MPL Labor Supply
France 1/10 1/15 90
Germany 1/12 1/20 120
Answer the following questions and show your steps. For the T/F questions, please explain why they are T/F.
assume that under free trade, the relative price of pens equals 0.65; i.e. PpensT/PpencilsT = 0.65.
11. Draw the CPF for France, and label your picture. You can draw a new picture, or in the same picture as 1 above. What is the slope of CPF? (4 points)
12. Under free trade, the relative wage of France to Germany (wFRANCE/wGERMANY) equals 16/13.
13. Under free trade, the real wage for pencils in Germany equals 13/400.
14. Under free trade, the real wage for pencils in France equals 1/15.