Week One In Class Questios

Week One In Class Questios - Mexico Socks 3/5 bball bball...

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Activity – Comparative Advantage and Trade Scenario: 2 countries – China and Mexico w/ current resources, China can produce either 0 socks, 30 baseballs OR 50 socks, 0 baseballs and has a linear PPF and Mexico can produce either 0 socks, 60 baseballs OR 80 socks, 0 baseballs. 1) Draw PPF for each country 2) Calculate table of opp costs for each good, country 3) Who has AA? CA in socks, baseballs? 4) Give range of possible trading prices of socks for 1 baseball China
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Unformatted text preview: Mexico Socks 3/5 bball bball Baseballs 5/3 socks 4/3 socks AA for Mexico in both. CA for China in socks and CA for Mexico in bballs. China will only trade if cheaper than doing themselves implies <5/3 socks for bballs Mexico will only trade if cheaper than doing themselves implies >4/3 socks for bballs Therefore world trading price has to be 1 baseball for between 5/3 and 4/3 socks. Socks baseballs baseballs Socks 30 60 80 China Mexico 50 1...
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