6. Look at the diagram below and answer the following questions. Y 20 Trade in the...

  

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6. Look at the diagram below and answer the following questions. Y 20 Trade in the standard model Nation 1 B A C 20 15 X Nation 2 A B 15 X a. Now, there is a trade involved in this case. Who is specializing in good X, and who is specializing in good Y? Are they completely specializing in any of the two goods? b. What are the terms of trade for each of the two nations after the specialization took place? Remember that the terms of trade are measure in relative price terms. 6. Look at the diagram below and answer the following questions. Y 20 Trade in the standard model Nation 1 B A C 20 15 X Nation 2 A B 15 X a. Now, there is a trade involved in this case. Who is specializing in good X, and who is specializing in good Y? Are they completely specializing in any of the two goods? b. What are the terms of trade for each of the two nations after the specialization took place? Remember that the terms of trade are measure in relative price terms.