Ch 5 Global Trade [AP & Reg]

Thegains

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Unformatted text preview: 80 60 40 20 0 1C = __ F Fish 240 180 120 60 0 1C = __F 1/4 Chips 0 5 10 15 20 __ C = 1F Chips 0 10 20 30 40 __ C = 1F 1/6 12 chips [60x1/5] chips Before: Before: 40 fish 40 180 fish 180 220 fish 220 After: 240 fish 240 240 – 220 = 20 fish 240 20 Terms of Trade 1 Chip = __ Fish 5 Before: Before: 6 10 chips 10 10 chips 10 20 chips 20 After: 20 chips 20 20 – 20 = 0 chips 20 chips 20. (Piggy/Wiggy) has an absolute advantage in both fish & chips. . 21. For Wiggy, the opportunity cost of producing 1 ton of chips is (1/4/6) tons of fish. 22. Wiggy should specialize (export) in (fish/chips) and import (fish/chips). 23. Before specialization and trade Piggy chose combo “C” and Wiggy chose “B”. After specialization, the gains from trade were (20/40/60) tons of fish and (0/10/20) tons of chips. 15 soups [30x1/2] Doggy A B C D E DCC: Doggy Woggy A B C D E DCC: Woggy 1 Soup 60 45 30 15 0 1S = __ P Soup 20 15 10 5 0 1S = __ P 1/3 Peanuts 0 15 30 45 60 Peanuts 0 15 30 45 60 __ S = 1P 60 Peanuts [30x2...
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