Consider an economy with 2 goods and 2 identical agents, each of whom has the following utility function, 11(31, 3:2) = In 3:; + 2111332. The…
September 3, 2020
5 bill 5 bill Household consumption 2000 Beginning – of – year inventory stocks 1000 Depreciation 100 End – of – year inventory stocks 800 Exports
September 3, 2020

Please answer the following questions in the attached screen shot.

1 . What is the cornerstone of trade !"The fact that countries have different factor endowments.Specialization .The presence of economies of scale .Monopoly power .1 . Why doesn’t Canada From’ it’s on’n bananas!It is not possible to grow bananas in Canada .Canada’s factor endowments suggest that it can better product many other goodsbesides bananas .It is cheaper to buy, bananas from countries that have different factor endowmentswhich are much better suited to growing bananas .Both bland cyAclaw is the productivity per worker (kilos per day , in the rick and heer industries of"Catalonia and Licanada . The working population in each country is 12 million people*HILLHEEYCatalonia#granada23. Refer to the data above to answer this question . In which product does Catalonia have acomparative advantage "AJ Rice . BY BELT . Both rice and her . I’; Neither rice nor beer .4 . Refer to the data above to answer this question . Support that each country,’ allocates }million of its population to the rice industry , the rest being employed in the beerindustry . What is their Limint ; total production ?"20 Fire and 10 beer .$5 rice and 15 beer.4% rice and 24 beer .21 Fire and ?’ 1 beer .Suppose that initially each country allocated 5 million of its population to the riceindustry , the rest being employed in the beer industry . If they now; decide to totally*specialize in the products in which each has a comparative advantage , what will be theresulting gains from trade"U nice and 15 here .L`)$5 rice and $5 beerI rice and I beer .21 rice and U beer .

Place Order