What was David Humes specie-flow mechanism?
6. Country A uses 4 units of labor to produce one unit of food and 8 units of labor to produce one unit of cloth. Country B uses 3 units of labor to produce on unit of food and 5 units of labor to produce cloth. Assuming that labor is the only factor of production in booth countries, can these two countries gain from trade? Use a diagram to clearly explain. Be as specific as you can and clearly explain the key points on your graph. 7. What is does MRS (along an indifference curve) reflect/explain? 8. Show how a country’s production and consumption are determined under autarky. 9. What did David Ricardo mean by “comparative advantage?” 10. What do we mean by “terms of trade?” 11. A small country produces computers and rugs. At the relative price of 10 rugs per 1 computer this country produces 50 rugs and 10 computers under autarky. a) Draw a Neoclassical production possibilities curve and show the point of production (and consumption) for this country to reflect the information describe
