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International Trade Assignment 1 - Labor Productivity, Comparative Advantage, and Exchange Rates

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Added on  2019-09-23

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This assignment covers topics such as labor productivity, comparative advantage, and exchange rates in international trade. It includes exercises on daily production possibility frontier, marginal productivities of labor, and the Ricardian model.

International Trade Assignment 1 - Labor Productivity, Comparative Advantage, and Exchange Rates

   Added on 2019-09-23

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International trade Assignment 1Due date: September 29, 2016 Fall 2016 Trade inter Assignment 1 sep 2016H. Moussa Instructions: Attempt the following exercisesExercise 1 Nation 1 has 200 labourers and Nation 2 has 100 laborers. The labor productivity of each nation for bicycles and shoes is given in the table below.Output per Labour DayAnswer the following questions and justify your answers.a)Draw the daily production possibility frontier for each nation, with Bicycles on the vertical axisb)Which nation has a higher standard of living before trade? (Assume the population is the sameas the number of labourers.)c)What is the opportunity cost of Shoes and bicycles in each nation,d)Can these two nations, with very different standards of living, beneficially trade with each other?e)Suppose now that one labourers in Nation 1 can produce 30 units of Shoes or 30 Bicycles per day. Can these two nations beneficially trade with each other now?Part 2: attempt any one of the following two exercises Exercise 2 The outputs per labourer per day for milk and wheat for Germany and Canada are provided in the table below. Labor is the only input.Output per Labourer per DayGermanyCanadaMilk (litres)510Wheat (Kg)2025Nation 1Nation 2Bicycles4010Shoes2010
International Trade Assignment 1 - Labor Productivity, Comparative Advantage, and Exchange Rates_1

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