(Solution) - In the same apple computer trade example given in Section 19 5 -(2025 Original AI-Free Solution)
Paper Details
In the same apple?computer trade example given in Section 19.5, suppose that because of technology transfer, the South becomes just as productive as the North at producing apples: one unit of southern labor can now produce 160 apples instead of 100.
(a) Autarky: Redo Table 19.3 to reflect this change. Assume the other parameter values are unchanged.
(b) Free trade: Do the same thing for Table 19.4.
(c) Discuss the differences: How do the gains from trade change? Who benefits from the improvement in technology in the South?