I already understand most of the problem since it\'s on textbook solutions. I am
ID: 1189548 • Letter: I
Question
I already understand most of the problem since it's on textbook solutions. I am still having trouble on Part C when it asks for "how many days Germany saves per unit of its import good." Is there a way I can get a more elaborated view of the work needed to solve for it? I also need help on part D for how much Germany saves per unit of their respective import good. I just need a more elaborated view of work needed to be done for both, the given description was a little too vague for my understanding.
Explanation / Answer
(c)
In autarky in France it sacrifices 25 units of wheat to produce a computer (because computer production takes 100 days and production of wheat takes 4 days).
As given in the question that If it take 22 wheat to import the computer (days gain will be 3 and in terms of gain in days in terms of wheat 1day of computer= 4 days of wheat), therefore France will save 12 days (= 3x4) of labor/computer.
Under autarky, in Germany it takes 1/20 of a computer (3 days) to acquire one unit of wheat.
If trade it take 1/22 of a computer (2.73 lesser than 3 days)/wheat,
Germany will save 0.27 days per unit of wheat import.
(d) Germany saves 0.5 days of labor per unit of wheat, France will save 4 days of labor per unit of computer;
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