There are two countries in the world: Hungary and Austria. The technology available in Hungary allows it to produce 1 ton of beans using 1 hour of labor the only factor of production or ½ ton of corn...

There are two countries in the world: Hungary and Austria. The technology available in Hungary allows it to produce 1 ton of beans using 1 hour of labor the only factor of production or ½ ton of corn with 1 hour of labor. In Austria, 1 hour of labor can produce 1 ton of beans but 1 hour of labor produces an even smaller fraction, 1/8 ton of corn. You may assume full employment, perfect goods and factor markets, no international labor movements, and no impediments to trade.

Continue with the production information on Hungary and Austria given above assuming now that preferences in both countries are such that consumers in both countries always spend half of their income on beans and half of their income on corn.

Generate the export supply function for the country with the comparative advantage in corn and import demand function for corn of the other country and graph both of them as functions of the relative price of corn, (P_c/P_b)

Find equilibrium production, and consumption in both countries and the relative price of corn at which the world market clears.

Can either consume a combination of beans and corn that is infeasible in autarky? Why or why not?