Question

The table below shows the number of hours of labor required to produce one unit of output of two different products (A and B) in two different countries (1 and 2).

Product A Product B

Country 1 6 2

Country 2 3 .   4

In trade equilibrium, the real wage of workers from country 2 employed in sector B will be Group of answer choices

A equal to 1/2

B equal to 1/4

C equal to 4

D larger or equal than 1/4 but smaller or equal than 1

Answer 1

Product A Product B. - Country of lountry 2.--- w Sime b 7 3 1 Therefore, country 1 has comparative advantage in the production of Product B and country 2 has comparative advantage in the production of product. Bu Let PA and Po be the price of product A and product b respectively Sime, hourly wages of workers will equal the value of product produced in an hours Therefore hourly wages to workers in the production_of_Ain_country to A_ Hourly wages of workers in production of Bin -country of country to wants to produce both goods then hourly wages in both products must be equal. So, P = PB = PA = 6 = 3 - PB 2 Similarly, hourly wage in production of A in country 25 PA

Hourly wage in production of B in country 2 = P& of country 2 wants to produce both goode them In trade equilib thie in between 3 and 3. If we suppose in equilibrium PA at thin Fredd wage of our workers from country 2 employed in sector B will be larger or equal to I but smaller than or equal to 1.