a country produces and consumes 8 units of sugar cane costing $50 per unit and two ipods that cost $200 each. after specialization and trade, that country consumes 8 units of sugar cane and four ipods. With 24 units of labor, what are wages in this country?

Answer: $33 without trade, $50 with trade

Explanation:

Wages can be defined as any monetary compensation paid by an employer to his/her employee for work done during a specific period of time. Payment may be calculated as a fixed amount for each accomplished task, or on hourly basis, daily rate, or based on the quantity of work done, which has been easily and adequately measured. The wages of this country if a efficiently calculated is $33 without trade and $50 with trade.

The wage level is $33.33 without trade, and $50 with trade.

Explanation:

There are two scenarios in this question: with trade and without trade. The wage level for either scenario is calculated as follows.

Wage level = Total output / Number of workers

Without Trade:

Total output = Value of sugar cane + Value of ipods

= (8 units x $50) + (2 units x $200)

= $800

Number of workers = 24

Wage level = $800 / 24

= $33.33

With Trade:

Total output = Value of sugar cane + Value of ipods

= (8 units x $50) + (4 units x $200)

= $1,200

Number of workers = 24

Wage level = $1,200 / 24

= $50