Given the resources available to Denmark and Ethiopia, the table below shows how much of each good
Question:
Given the resources available to Denmark and Ethiopia, the table below shows how much of each good each country could produce if they devoted all of their resources to producing that one good (and therefore NONE of the other good). Determine which country has the absolute advantage in producing each good, the comparative advantage in producing each good, a price (expressed in terms of the amount of one good traded for 1 unit of the other good), and an amount of trade that would allow both countries to consume more of both goods than they did without trade when devoting half of their resources to producing each good.
Hats | Bicycles | ll | |
Denmark | 1200 | 300 | |
Ethiopia | 600 | 300 | |
Abs. Adv. Hats | Abs. Adv. Bicycles | ||
Comp. Adv. Hats | Comp. Adv. Bicycles | ||
Possible Trading Price | Trade Quantities |
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman