# Answer to Question #60233 in Other Economics for M.A

Question #60233

Suppose in autarchy that Midland and Zeeland have the following price ratios for Chicken (C) and Noodles (N).

Midland: Pc/Pn = 4/1

Zeeland: Pc/Pn = 1/2

1. What is the range of relative prices for which Zeeland willingly specializes in and exports chicken?

2. What is the range of relative prices for which Midland willingly specializes in and exports Noodles?

3. What is the range of prices for which both 1 and 2 is true?

4. Assume a relative price within the range given in 3 and graphically show each of the following for Midland. Assume that Midland and Zeeland have increasing opportunity costs.

a) Autarchy equilibrium. Label it A.

b) The production point after trade. Label it P.

c) The consumption point after trade. Label it C.

d) Exports. Show the distance.

e) Imports. Show the distance.

f) Gains from trade.

Midland: Pc/Pn = 4/1

Zeeland: Pc/Pn = 1/2

1. What is the range of relative prices for which Zeeland willingly specializes in and exports chicken?

2. What is the range of relative prices for which Midland willingly specializes in and exports Noodles?

3. What is the range of prices for which both 1 and 2 is true?

4. Assume a relative price within the range given in 3 and graphically show each of the following for Midland. Assume that Midland and Zeeland have increasing opportunity costs.

a) Autarchy equilibrium. Label it A.

b) The production point after trade. Label it P.

c) The consumption point after trade. Label it C.

d) Exports. Show the distance.

e) Imports. Show the distance.

f) Gains from trade.

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