Assume that the world consists of two countries, the US and India. Technologies are as follows:  Hours required for production textiles India: 8 Hours required for production textiles US: 6 Hours of production for airplane India: 24 Hours of production for airplane US: 8 India is endowed with 96 hours of L. Let textiles be the numeraire: Pt =1, so Pa=relative price of airplanes=$ price of airplanes. a. What is the range of possible values for the eqm (rel.) price of airplanes under free trade, FT? b. Suppose the FT price of airplanes is 2. What is the equation that describes the set of possible Cbundles for India under FT? Under autarky?

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Welfare Analysis

Welfare analysis of the society is related to welfare economics. From the economic point of view former welfare economics refers to that subject which uses the techniques of microeconomics to analyse and evaluate the welfare at the economic or aggregate level.