Question

1. Economies of Scale Assume that there are only two countries: Home and Foreign both producing smart phones and computers. endowment. Each country has 100,000 labor hours available of which it allocates equally to each These two countries have identical demand, production technology, and resource industry. The unit labor requirement is 20 hours for phones and 25 hours for computers. The labor requirement for phones does not change with the quantity of output. On the other hand, the unit labor requirement in computers falls to 20 when Foreign produces 4100 computers world total in each product? (Hint: first, find out available labor hours for each industry, then find the quantitics from the labor hours and labor requirements) (1 points) B.) What is the amount of labor hours left for phones production in Foreign when they take the advantage of economies of scale? (1 points) (Hint: the same as above, this time assuming Foreign using the economies of scale) C.) What is the amount of phones in Foreign after economies of scale? (1 points) (See how much labor hours left for cheese, then find the quantity) D) What is the world production in smart phones and computers after trade? (2 points)

Answer 1

29 e ne g, Conp : 2000十2000 4000 Uw 82 , ooo loo , ooo-87000

900 U- Since Pre 12 100,009,