o Without trade, Brazil produces 75,000 units of clothing and 30,000 cans of soda.
o Denote these points on each other’s production possibility frontier.
• What is the marginal transformation rate for each country?
o Should the two countries specialize and trade?
o If so, who has the comparative advantage in what product?
o Once they specialize, how much does output increase?
• What are the terms of trade if the United States trades 1 can of soda for 5 units of clothing?
o Are the consumers in each country better off?
• What is the labor-intensive good?
• What is the labor-abundant country?
• What is the capital-abundant country?
• Could trade help reduce poverty in Brazil and other developing countries?
• How do product and factor prices and wages eventually equalize between the two countries?
Recently Asked Questions
- P11–13 Initial investment at various sale prices Edwards Manufacturing Company (EMC) is considering replacing one machine with another. The old machine
- Enclosed you will see my specific question with details. Thank you.
- Please briefly comment substantively on the two separate discussion topics by each authors name.