a. Which country has the absolute advantage in each good? Indicate each country's comparative advantage.
b. In what range will the world trading price ratio lie when these countries open up to free trade? Will both country's be better off?
*hint* - a) no hint b) compare pretrade price of wheat in terms of clothing and pretrade price of clothing per unit of wheat
This question was asked on Mar 16, 2010 and answered on Mar 17, 2010.
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