Use the diagram above to identify the pre-trade situation for Australia and Sri-Lanka
Where on the K/L axis will you find each of the two countries? Which of the two countries has a higher relative wage, w/r? Which product is the labor intensive, and which is the land intensive one? Show where the relative price of cloth to food will be found once trade opens between these two countries. Show where the relative wages of each will appear.
You will find Sri-Lanka to the left of Australia on the K/L axis.
Australia has a higher relative wage.
Food is the land intensive product.
The relative price PC/PF is found between the two autarkic prices.
The post trade relative wage is between the two autarkic ones on the vertical axis.
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Waiters, barbers, and bellhops are paid primarily through tips because
a. managers can easily assess their productivity b. managers are better at judging their productivity than are consumers c. consumers can judge their productivity easily d. it's always been done that way e. union regulations require this form of payment
_______________ —a term referring to the government practice of enacting laws to regulate prices instead of letting market forces determine prices.
a. Price ceiling b. Price floor c. Price control d. Subsidies
Which of the following examples shows a firm that probably has a monopoly?
a. Birchfield, Inc. exits its market after many other firms enter it. b. After five years, Samson, Inc’s marginal revenue equals its marginal cost. c. BRV, Inc.’s economic profits gradually decline over six years until they reach zero. d. Mongul, Inc. makes large profits for ten years.
Marginal revenue product equals marginal revenue times the price of output.
Answer the following statement true (T) or false (F)