Question: Consider a two-country, two-commodity model. The table below shows the units of Good X and Good Y produced in Country A and Country B per

Consider a two-country, two-commodity model. The table below shows the units of Good X and Good Y produced in Country A and Country B per labor hour.

Productivity

Country A

Country B

Good X

1.00

0.50

Good Y

0.20

0.70

  1. (2.0 pts) Determine the number of labor hours required to produce one unit of each good produced in each country. Show your answer in a table format like above.

Answer:

Country A

Country B

Good X

Good Y

  1. (2.0 pts) Determine the commodity of absolute advantage for each country. Explain why.

Answer:

  1. (3.0 pts) Calculate the opportunity cost of producing one unit of each good in Country A and B. Determine the commodity in which each country has a comparative advantage.

After doing your calculations, put your numbers in a table.

Answer:

  1. (1.0 pt) Determine the range within which mutually international trade can take place for good X in terms of good Y.

Answer:

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