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Ch 5 Global Trade [AP &amp; Reg]

# The gains from specialization did gains

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Unformatted text preview: ] Before: Before: 30 soups 30 10 soups 10 40 soups 40 After: 60 soups 60 60 – 40 = 20 soups 60 20 Terms of Trade 1 Soup = __ Peanuts 2 Before: 3 30 peanuts 30 30 peanuts 30 60 peanuts 60 After: 60 peanuts 60 60 – 60 = 0 peanuts 60 peanuts 24. If trade occurs, Doggy will export (soup/peanuts) and import (soup/peanuts). Woggy will export (soup/peanuts)and import (soup/peanuts). 25. For Doggy, the opportunity cost of 1 soup is (1/2/3) peanuts. For Woggy, the opportunity cost of 1 soup is (1/2/3) peanuts. 26. Prior to specialization, Doggy & Woggy chose combination “C”. Now each specializes according to comparative advantage. The gains from trade will be (0/20/40) units of soup & (0/20/40) units of peanuts. The c o untrie s o f: The “Fuzzy” and “Wuzzy” a nd “Wuzzy” Fuzzy A B C C E F DCC: Fuzzy Wuzzy A B C B E F DCC: Wuzzy D D Fuzzy 900 Plums 1500 1200 900 600 300 0 1G = __ P Plums 3500 2500 1500 1000 500 0 1G = __ P 3 1G 3500 2500 150 200 Grapes 0 100 200 300 400 500 __ G= 1P...
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