Ch 5 Global Trade [AP & Reg]

The gains from specialization did gains

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

This note was uploaded on 07/20/2012 for the course ECON 2106 at GCSU.

Ask a homework question - tutors are online