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 |
- (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 |
- (2.0 pts) Determine the commodity of absolute advantage for each country. Explain why.
Answer:
- (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:
- (1.0 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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