# Jkjjb

Topics: Economics, International trade, Comparative advantage Pages: 1 (263 words) Published: December 12, 2012
Question 65 Questions

65.Referring to Exhibit 29-4, suppose you are given the following information about the production of two goods in two countries. (A)| Who has an absolute advantage in the production of each good? A| (B)| Find the opportunity cost of producing bananas in each country.A: banan 6/12 = 0,5 radio 2B: banan 2/8 = 0,25 radio 4| (C)| Who has a comparative advantage in banana production?Country B.|

66.Suppose the post-trade relative price is 1/3 radio per banana, or equivalently 1 radio per 3 bananas. Based on the information in Exhibit 29-4, demonstrate the gains from trade to each country by assuming each takes 10 units of labor from the production of one good, moves the units of production to the other good, and trades the extra production with the other country.

A: loose 120 bananas and produce 60 radios
They exchange it for 60*3 = 180

B: loose 20 radios and get 80 bananas

They exchange it for 80*1/3 = 26,66