Assume that in Bolivia it takes $90$ hours of labor to produce a ton of salt and $60$ hours of labor to produce a ton of soybean oil. In addition, assume that in Brazil it takes $80$ hours of labor to produce a ton of salt and $40$ hours of labor to produce a ton of soybean oil. Answer

the following questions! $(15$ minutes$)$

a$.$ How high is productivity in Bolivia and in Brazil in the salt production?

b$.$ How high is productivity of Bolivia and in Brazil in the soybean oil production?

c$.$ Does Brazil have an absolute advantage in the production of salt?

d$.$ Is the price of salt in terms of soybean oil $$ in the absence of trade $$ higher in Brazil

than in Bolivia?

e$.$ Will Bolivia $$ with trade and in the absence of trade restrictions and decisive

transportation cost $$ specialize in the production of salt?

Answer rating: 100% (QA)

a Productivity in salt production In Bolivia 1 ton of salt requires 90 hours of labor In Brazil 1 to... View the full answer