Ch 5 Global Trade [AP & Reg]

31russiaushasanabsoluteadvantageinbothcommodities

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Unformatted text preview: Grapes 0 150 300 450 575 700__ G = 1P 150 1/3 500 1/3 Before: Before: 900 plums 900 2500 plums 2500 3400 plums 3400 After: 3500 plums 3500 3500 – 3400 = 100 plums 100 Terms of Trade 4 1 Grape = __ Plums 1/5 1/5 5 1P 1P Before: Before: 200 grapes 200 150 grapes 150 350 grapes 350 After: 500 grapes 500 500 – 350 = 150 grapes 500 150 11. In Wuzzy, the opportunity cost of 1 grape is (1/2/3/4/5) plums. Wuzzy opportunity 12. Fuzzy has a comparative advantage in & should produce (plums/grapes). comparative 13. The terms of trade will be 1 grape for somewhere between (3&5/2&6) plums. terms 14. Assume that if Fuzzy did not specialize it would produce combo “C” and if Wuzzy and Fuzzy combo did not specialize it would produce combo “B”. The gains from specialization did gains specialization and trade are: (0/100/150) plums and (0/100/150) grapes. and Djibouti DCC: Djibouti Canada DCC: Canada costs costs Fish 10 hours 1W = __F 2 Fish 20 hours 1 W = __ F 3 Wheat 20 hours ___ W=1F Wheat 60 hours ___W = 1F 1/3 1/2 Terms of Trade: 2.5 1 Wheat = __ Fish 2...
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This note was uploaded on 07/20/2012 for the course ECON 2106 at GCSU.

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