Economics Consider two countries in a situation of international trade. The first is a large market (Asia) and has 10,000 work units. The second, the smallest, Europe, has only 4,000 units. Labor is the only factor of production and only two activities are possible in these economies: the cultivation of Rice (R) and the manufacture of clothing (V). The time needed to produce one unit of Rice and Clothing is given in the following table: Rice Clothing Asia 10h 30h Europe 20h 20h Demand for Rice in Asia is: DA = 1000 (1 – PR/PV) Demand for Rice in Europe is: DE = 500 (1 – PR/PV) a) Graphically represent the supply of rice as a function of the relative PR/PV price in Asia b) What are the productions of balance in autarky in Asia? Give a graphical representation of this balance.
