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Business, 11.10.2020 23:01 uehlingt39

Suppose that: In Malaysia the unit labor requirement (ULR) to produce a pound of rice and a pencil are 1 and 2 hours of labor respectively; In Indonesia, the unit labor requirement to produce a pound of rice and a pencil are 2 and 3 hours respectively; each country has 10,000 hours of labor to allocate between the production of rice and pencils; and in autarky, Malaysia consumes 5,000 pounds of rice and 2,500 pencils. When trade occurs, the world relative price of rice P\tfrac{W}R{}/P\tfrac{W}{P} becomes 3/5a. Given that the marginal product of labor is the inverse of unit labor requirements, i. e. MPL = 1/ULR, derive the relationship between price ratio and the ratio of unit labor requirements. (hint: remember that w = P * MPL and that in autarky wages in both sectors are equal)b. Which country has the better technology?c. What are the autarkic (pre-trade) relative prices of rice and pencils respectively in each country?d. How many work hours are employed in the Pencil and Rice sector repectively in Malaysia?e. In which product will each country specialize?f. When specializing, how many units of rice and pencils will Malaysia produce? (hint:obtain total labor hours available from your answer in part d. above)

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Suppose that: In Malaysia the unit labor requirement (ULR) to produce a pound of rice and a pencil a...
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