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Question: consider the following ricardian model mpl labor supply pens pencils...

Question details

Consider the following Ricardian model.

MPL                           Labor Supply

Pens           Pencils

       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.

7. Going from closed-economy to free trade, pencil-producing workers in France achieve higher standards of living, but pen-producing workers do not.

8. Under free trade, the pen output of the entire world equals 10 units.

9. If Germany consumes 7 pens under free trade, then France consumes 3 pens.

10. If Germany consumes 7 pens under free trade, then France imports 3 pens.

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