Suppose that U.S. auto producers decide to raise prices to take advantage of their comparative advantage. Given the exchange rate is P10 = $US1 and trade costs of 10%, what is the maximum price that they can establish (net of trade costs) that will just allow them to sell U.S. autos at the same price as Mexican-produced autos? 

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Finding the Maximum Price for US Autos Heres how to find the maximum price US auto producers can set to compete with Mexicanproduced autos 1 Identify ... View the full answer