Please help Shoes come in pairs: A left (foot) shoe has to find a right (foot) s
ID: 2506720 • Letter: P
Question
Please help
Shoes come in pairs: A left (foot) shoe has to find a right (foot) shoe. A representative worker in the North can produce EITHER 30 right shoes OR 10 left shoes (or any convex combination of these figures). There are 10 workers living in the North. A representative worker in the South can produce either 1 right shoe or 3 left shoes (or any convex combination of these figures). There are 100 workers in the South. How many pairs of shows the North will produce in the case of aurtarky (no trade)? And how many pairs of shoes the South will produce under no trade? Suppose that these two areas open up to trade and one right shoe can be exchanged for one left shoe. How may pairs of shoes will the North consume? And the South? Suppose now that population in the South increases to 1000 workers. What would be the new exchange rate for right/left shoes and how many pair of shoes the North will be consuming?Explanation / Answer
1) In case of no trade north will produce
The shoes pair are produced in ratio of 3:1
10 worker= 300 left shoe OR 100 right shoe
and maximum 60 pairs when 2 workers are employed to make left shoes whereas 6 are employed to make right shoe.
For South:
100 worker= 100 Right and 300 Left
75 pairs are possible as 25 workers will be employed for left shoe whereas 75 will be for right shoe.
2)North will consume 100 Right shoes soth will also consume the 100 Left shoe.
3) 1000 workers = 1000 right and 3000 left
New exhange rate will we for i right 10 left shoe can be exchanged.