MicroChapter23HW - NAME:Sofia Kohler DATE: GRADE: Micro...

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NAME:Sofia Kohler DATE: GRADE: Micro Chapter Twenty-three HW – International Trade 1. Suppose that with no international trade between the United States and Brazil, Figure 1 shows the U.S. production possibilities and the quantities of coffee and cars produced (point A). Figure 2 shows Brazil's production possibilities and the quantities of coffee and cars produced (point B). a. What is the opportunity cost of a bag of coffee in the United States? b. What is the opportunity cost of a bag of coffee in Brazil? c. Which country has a comparative advantage in producing coffee? d. Which country has a comparative advantage in producing cars? e. With free trade between Brazil and the United States, what does the United States import from Brazil and what does it export to Brazil? Explain your answer. f. Does Brazil gain from trade with the United States? Why or why not? 2. When free trade occurs in exercise 1, the world price of a bag of coffee is 1/25th of a car. If Brazil completely specializes in coffee and exports half of it to the United States,
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This note was uploaded on 05/18/2008 for the course ECON 251 taught by Professor Spencer during the Spring '08 term at Northampton Community College.

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