ECON_102_CH2B

ECON_102_CH2B - Toms Factory 4.0 1.0 a 1.0 a b b 3 Gains...

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Gains from Specialization and Trade C – Cake D - Danishes 1 C D D 1.33 1.33 4.0 C Nancy’s Factory Tom’s Factory 4.0 o.c. of D  1.33/4 = 1/3C o.c. of C  o.c. of D  4/1.33 = 3C o.c. of C  1 1 1 1 a b a b 2 2
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Tom has a comparative advantage in making Danishes and Nancy has a comparative advantage in making Cake . Gains from Specialization and Trade 2 C D D 1.0 1.0 1.33 1.33 4.0 C Nancy’s Factory
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Unformatted text preview: Toms Factory 4.0 1.0 a 1.0 a b b 3 Gains from Specialization and Trade 4 C D 1.0 1.0 1.33 4.0 C Nancys Factory Toms Factory 4.0 1.0 a 1.0 a b b c 2.0 c Trade Line Trade Line 2.0 Pt. c Tom produces 2 danishes and consumes 2 cakes Pt. c Nancy produces 2 cakes and consumes 2 danishes 5 D 1.33 2.0 2.0...
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ECON_102_CH2B - Toms Factory 4.0 1.0 a 1.0 a b b 3 Gains...

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