Consider the Information in the Following Table (A) Assuming Free Movement of Labor, and Wine Is the c

question 41

Essay

Consider the information in the following table.
$$\begin{array} { l c c } \hline & \text { England } & \text { Portugal } \\\hline \text { Number of workers } & 25 & 200 \\\text { Bottles of wine per worker } & 40 & 50 \\\text { Wheels of cheese per worker } & 4 & 1 \\\hline\end{array}$$
(a) Assuming free movement of labor, and wine is the numéraire good, to which country (host country) would labor migrate? What would the wage be in that country?

(b) Assuming the host country dedicates half its income to the production of each good, what would total production be? What is the wage of each worker? What would consumption per worker be for each good?

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Definitions:

Commercial Unit

A standard of goods or products that are considered as a single whole for purposes of sale and division, often relevant in transactions and legal contracts.

Bales of Hay

Bundles of hay that have been tightly bound with twine or wire and are used for feeding livestock or as agricultural mulch.

Accepted

Recognized as true or valid; in the context of contracts, to agree to the terms of an offer.

Perishable Goods

Items, especially foodstuffs, that are subject to spoilage and decay in a short period of time if not properly cared for.