Wages in the Classical Model
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Assume Ricardo’s classical model of international trade
Hours of labor required to produce cotton and fish are respectively 5 and 6 in Rusland, and 10 and 18 in Armland. Wage rate in Rusland is 300 rubles. Exchange rate is 10 drams per ruble. Both countries are completely specialized and trading according to their comparative advantages.


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What is the maximum possible competitive wage rate in Armland expressed in drams? *
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What is the minimum possible competitive wage rate in Armland expressed in drams? *
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Now assume wage rate in Armland exceeds maximum possible competitive amount, and is equal to 2000 drams (please check all correct answers). *
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How may Armland recover its competitive advantage (please check all correct answers)? *
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All else equal, how much should dram AT LEAST change for Armland’s competitive advantage to be recovered? *
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