Study Guide Review Question Solutions
216 Krugman/Obstfeld † International Economics: Theory and Policy, Eighth Edition d. Given pr/pB = 2, each country’s production specialization can be determined by comparing the wages which workers earn in the tennis racket industry with those earned in the bat industry. The Home worker earns pr/aLr = 2/2 = 1 producing rackets and pB/aLB = 1/6 producing bats.
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