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Unformatted text preview: Friday, September 08, 2006 Portugal England Wine/hr Wine/hr 8 New CPF New CPF 5 4 5 6 8 Cloth/hr 5 Cloth/hr The terms of trade = 1 bottle of wine = 1 yrd of cloth Example 2 Malaysia Philippines Rubber Rubber Ton/yr Ton/yr 30 10 20 Steel 40 Steel Ton/hr Ton/hr Opportunity Costs Malaysia Philippines 1 ton of Rubber 2/3 tons of steel 4 tons of steel 1 ton of steel 3/2 tons of rubber tons of rubber Malaysia has comparative advantage in rubber Philippines has a comparative advantage in steel Malaysia has got to get more than 2/3 tons of steel for each ton of rubber Philippines has got to get more than ton of rubber for each ton of steel...
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