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April 17th, 2018, 10:53 AM   #1
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Micro-economics

Hello

Can you help me please about the next exercise:

Farm (economic system) produces two products, X and Y, through workers (men and women).
The farm has 100 workers (men) and 100 workers (women).
Each employee (man) can produce one unit of X or 3 units of Y.
Each employee (woman) can produce 2 units of X or 20 units of Y.
It is known that the farm is always interested in consuming Y product five times more than that of X (in other words, y = 5*x).
The global price of product X is 10 dollars per unit. The global price of product Y is 2 dollars per unit, and at these prices the farm can buy and sell any quantity it wants.
1. How many units will the farm produce from each product (X and Y)? Solved it already, 100 units of X and 2000 units of Y.
2. How many units will the farm import and export from each product (X and Y)? Solved it already, 150 units of X and 750 units of Y.
3. How many units will the farm consume from each product (X and Y)? Solved it already, 250 units of X and 1250 units of Y.

Now there is another question that i need help about it:
Further to the previous questions, assume that the global price of X increased.
Is it possible that the situation of the farm will remain unchanged (meaning that it will continue to consume the same quantities)?
If yes, find the new world price. If not, explain why not.

The answer is: yes, the new price is 50$.
I understood why it's yes, but i didn't understand how it is 50$.

Thanks a lot!


*Sorry for bad english, but if you didn't understand something, then tell me please and I will try to find a way to explain it better.*
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April 17th, 2018, 01:09 PM   #2
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I understood why it′s yes, but I didn′t understand how it is 50.

Sorry, I saw a sentence in a strange spelling, so I wrote it here more clearly.
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