Question

Question 1 0.24 / 0.3 points A country produces cars and scooters using only manual labor. All its workers are identical. In a unit of time, each worker can assemble four cars or twenty scooters. Mark ALL the statements from the list below that you view as correct. In autarky, Pscooter / Pear -0.2 In autarky, Pear / Pscooter - 4 MPL = 4 cars In autarky, Pscooter / Pear = 20 ✓ In autarky, 1 car = 5 scooters in terms of market value

Answer 1

In autarky,

labor productivity of car per unit time=ac=4

labor productivity of scooter per unit time=as=20

Pscooter/Pcar=as/ac=4/20=0.2

Each worker adds to 4 cars per unit of time. So, MPL=4 cars

In absence of trade, Terms of trade will be

4 cars = 20 scooters

1 car = 5 scooter