Suppose that in england 5 man-hours are required to produce, Ask an Expert

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Suppose that in England 5 man-hours are required to produce each cask of wine and 5 man-hours are required to produce each bolt of cloth, whereas in Portugal 1 man-hour is required for a cask of wine and 4 man hours for a bolt of cloth. Each country has a labor force of 100 man-hours. If everyone in the world consumes exactly one bolt of cloth for each cask of wine, which country will export how much of what (if migration is illegal)? What are the gains from trade for each country? Hint: Can we figure out the equilibrium terms-of-trade without calculating the excess demand function(s)?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91997285

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