⽒ 0364 Problem Set # 1

Demand
"
U =
(Ci i ( (i) s = Ì
u.ci ci

BudgetlineiP.oC.tl?-Cz=P.-X.tPiX2slopeofBL=,2=PrimaxU=(Ci
icciicf.ci
s.t P.C.tl?Cz=P.N.tPzX2y=( ij(CiInIP.N.+Rx2-P.C.-PzCzJ.=osCci'c i
"
⼀
⼊ rp.io D

垐 oci-skciiccii-P.io
2
:

Ci
① ÷ ①
⼆号 ⼆点 ( )

cici-ci-P.li
sci-2R.ci
)
= 2 R
 RelutivedemandiMRS.MX Muz 2

iciciic.ci
=
i f
MRS ⼆号
=
器 = 12

a)
Homecouuty ( H ) i

C.RR.C.tl?.Cz=P..X.tPiX2,z.C.tCz=
Cz = 2

号 2
.

x .
t N2

Pr-C.tl z = R + 2

C.Prtz.ci R = R + 2

3 C , R =
R t 2

" R -
1 2
C ,
=

3R

2R ( Prt 2)
Ci =

3R

2kt 4
3
𡌃
 ForeigncountycpiPi.C.tl?.Cz=P..X.tPiX2,z.C.tCz= 号 2
.

x .
t N2

pr-C.tl z = R -
2 + 8

3 C. Pr = 2 Pr +8
2 R +8
⼼ =

3 P r

i z
=
2 R (2 R + 8)

3R

42
1 t 1 6
=

ClosedEcon.my
b)
underantarkyr.
X= CM .
H
= 1

i
"
G =
x = 2

F
CF =
x. =
2

CE =
x i =
8

=
器 = 12

autarkyrelativepriceiHomecouutyCHI.li = i£ .
= 1

PF
Foreignc.my (F) RHPF-IE.az
:
>

Foreigncouutvyhasahigherautavkyrelativepie.si
aratioofczandC.andG-X2.C.ix.undernasautarky.si
nceP.is
nceforiegnnmoreinitialendowmentofgo.dz ,

Thus.therdativepv.ie Bhigwi
𡌃
 Nalueofconsumptions.CM
c)
H
H.me :
=
X .
= 1

i
"
G =
x = 2

Foreign.CF-x.F-zCE-xi-8hueofhouseholdutiyvi.ci
Home , Ü
⼆
ii
≈ I. 5874

Foreignivicic.is
≈ 5. 0397

OpenEcon.mg

景
d)
i
"
R
(E) (
… = 2

景)
下

(g)
"

< (

Sincehomecountngltnhasalowerrelauheantuvypr.ie
indiatingtherehwepiceofgoodlislowerinh.me
comty.Therefore.h.me
countyhasacomparativeadvmtageingoodl.it
needstoexportit.to
regincountyhasacomparatieadvantageiugood2.it

ne dstexp.rtgo d2.Forhomecountyiexportgo dimportgo.dz

Forfovfncoutgiexportgood2importg.co dl
 utilitymaximizawnfornomecountyltli.it
e)

"

,
⼆ 只

哭
zRWCI-zC.HR
'
=

"

utiliymaximizatienfovforeigncomtry.nl F) :

ÈǙ - Pǒ

CZFC.tn

RWci-zCFPNrelativedemandiCY.CM
= 2

tc.FCitci-twrelatnesup hgicitCF-x.tk
mavketcitci-xitxE-zt8.io
F = 1 + 2 = 3

aewi n gxti x i
marketdeauhgH.me
t xi x i t xi - EU-x.i t
cowyictzp.no ⼆
了
元

Pr
"
⼆
Ě ⼀号
 picitci-Pfxitxipi.ci
( ipǐ :P
"

xitxi5.lt
+2 ,

i.ci tzc.H.is 2

3ciitpitz.ci
⼆号

ci.Ri_3RWCie.zCYRWci-z.t2.lt
-
-
2 .

这
5

⼆
22
= Zpǐeen
可 3

Forgiencouutngtpici-ci-Pi.x.txiRW.ci
tiptpi.it xi
5 5
i.ci +2 E.is -_-
3
.

z t 8
"

3 ( F P。
"
-

34 = R 。 2 t 8

C
" ,

⼆
百
CF
器
望
(
=

C 2
= 2
CFRWci.si 醮 .pt
34 5

ㄎ
= 2 ㄨ
后 ㄨ
咔16
4
=

68 _
⼆
可
Expovtsforhome.county :
4

godlEY-xi-CY-l-I-ERY-2EI-Twgo.dz
E.H-xi.ci = 2 -

f = -

i
i≤
(import )

= 2 -

Expovtsforforg.cn county :
34 4

godiEF-xi-CF-2-E-TCimp.net )
z-EPEif3P.no
=

go.dz EE-xi.ci =
8 -
68
T
=
4
a

㔖
4 + 16
= 8 - _
f)

uorldrelativesup lyixix.FM?=xi+xi=Imarketdearing
:

3
cǐ =
xǐ ==

5
P
.
"
⼆
Ǜǒ =
5

"
P. = 1

F
R = 2

pi
"
R
'"
< R <

5
1 c 2
C
5

theautavkyrelawepriceofhome.co
Theworldrelatitpriceisbetw.eu

piceoffaignncounty-The.ve
untugandtneautnrkyrelat.ie
isapvicedifference.thycantrade.withtneworld.at
wrldpviuglvalueofconswptionicalculationproces is howe .li u e)

34
ci ⼆号 C. ⼆
百

CFci-zC.HR
"

CFPN-2.is
= 2
z

了4 5

5
= 2 ×
5 x

=
i 68
=
可

Houieholdutiyinomeilicciicciitaign.li :
( C 肺 ( (i).

-
Ü (i) =
( 部 (i
= 1 . 6364 5. 0579

UnderAutwkyimÜ.me
: ≈ I. 5874
Foreig :
Ü ≈ 5. 0397

UHaudliiuweased.Thuefore.bothcountyave.be
comparetoutiliyuuderauturkg.bc.tn
0ft tter witutrade ,
h)

Underperfectcompeti ovipIWMa.HR
==
ai

㗊器 器

篫
hoviep.FW-a.TW
= 1

"

咔
⼀

器 器 ⼀⼼ 。

璗
foreigu.it
= 2

PF
号⼭ <
T
I < 2

Foreigncouutvyhasahigherautavkyrelativepie.P.is
aratioofaz.to a. ca E)
↑
sincetueforeigncoun.mg
hasarelatiehigherMPLforgoodz.Thm.it
hasahigharrelahep.ie e.
 2

i) U
'
= ( C.si ( (i)
5

maxci.ci
P.ci
wlit-C.ci
S.t.P.ci +
≤
2

wli-P.C-RCij -icfci.nl?=oI- icici-xR=oxci ci-5cz5

5
+ ⼊ [

是
。

iiic.is ⼆年
ZCP.CZ
c

Pzwli-P.ci + P.ci

P.ci +2C R
⼆

= 3 P.ci

.ci器 贵 ⼆点
C.

-
甙
honei.ci
哭 CM-j-a.H.li
⼆
,
"
= i .
3 .
1 = I

器
'"
a ⼆
、
cfi.ai.li ⼆ 为 3 -
1 = 2

c
foretgi5CF-j.aF.E-i.li 5 =
5
20

ci-i.a.F.li ⼆号 -
2 .
5 =
5

vnyivtcciiccici-U.ie (i)
= i i =
(iii)
≈ 1 59
≈ 4.20
-

home ↑ ↑
towigu
 opportuuiycostforgoodlhoneiaiT.IO
j)

towgn
:

器 = 2

pportuuiycostforgoodzinonen-H-ifove.in
0

: =

0
0 5
.

countyhasloweroppovtmiycostiuproduchggoodl.it
Home

hasacompavativeadantageofgoodi.so.it
specialize.in

prtiuproducinggoodz.it
odwcegoodlFowgncountyhasloweroppovtmiyc.rs
hasacompavativeadantageofgood2.so.it
specializeinprodwcegoodz.w.ru
snppyigoodlioi.li : 3 - 1 :
3

goodziai.li = 2 .
5 =
1 0

k)
homespeciwlizeiugoodiforeigsperioneingo.dz

atzero-pofi噐tconditiai.ci
ci ⼆点
wagelewdivi-ai.pt:3 Pǐ
WF-GF.pl:2 Rw
𢝵
 give.nl?wpRWmaxU=(ciicci)
I)

Homeici.ci
s.tl?WCi+PiCi'=PixitpixiL=(ci)Ici)+nlPiC.HtPici- Pǐxi -

Rwx i)

器 =
5 ( (i) ( (i) + P
"

、
⼊ ⼆ 0

器 -
2

5 ( (i) cciiepin.co
Ci
器

ic-zc.HR?PNCi+PiC'=pix.HtpixPictPizCiP=
==

pǐxitpǒxi
w

荁
"
⼆ 2C
"
Pǐc ! ⼗
, =
pǐxitpǒxi

ftp.wxiForhomeispecializeingo d/:x.H=worldsup ly=3xi:o

3C ipǐ =
pǐx

3c.HR 3 Dǐ
"
=

ci-lci-zc.HR "

⼆
zpǐ
ForegniaftermaximizationwegetiForeignspeciahzeingo.dz :

CE-zc.FR
"

xi-worldsupply-loxF.co
pǐxītpǒxī
bugetconstraiut3C.FR
3 Epǐ =

" "
⼆
以

CF =
10 Pǐ ⼆
10

3 Pǐ 可⼼
20

E 时
燕
0
2 .
。
⼆
亏
m)

homeuwtyixf-3.xf-OGH-l.CI
RWEfx.H.ci
= 2

exportEtxi-ci-o-zpii-zpiiwpovttlomecountyexp.net
= -
1 = 2

goodlandimport2pigood2foreigncountyiFXF-o.x.io
2

ci-EF-xi.ci
靠
下
C. ⼆

⼤ ⼆
0 ⼀

。
⼆ ⼀

靠
、
imp.nl
Ei xi.ci 2
5
5
=
= 1 0

export7-oveigucountyimp.it
- -
=

goodlandexportggoodz.vn
靠 。

) Ei = CF

{ Ei =
E

2 ⼆

靠
{ 1 0

5 = 2
12
" 5

norldmwketfoveachgoodcleeusonome.ci
R =
5

cciiccijtiuicciiccijiei .czpii-cii i-li.ci/=4.4b

2 2 2,
≈ .

Comparebothcsunti.es utilitynowuithbefore.ntiryofb.tn
countviesincreased.Thusibtcouutriesbetteroftfromtrad.eu