Mexico PPC

Product

A

B

C

D

E

Avocados

0

20

24

40

60

Soybeans

15

10

9

5

0

U.S. PPC

Product

R

S

T

U

V

Avocados

0

30

33

60

90

Soybeans

30

20

19

10

0

Comparative Advantage Questions

1.A What is Mexico's opportunity cost for producing Avocados?

1.B What is Mexico's opportunity cost for producing Soybeans?

2.A What is the U.S.'s opportunity cost for producing Avocados?

2.B What is the U.S's opportunity cost for producing Soybeans?

3. Determine which product each country has a Comparative Advantage in, showing your work.

4. Calculate the total output after specialization and trade for both countries.

5. Determine the Gains from Trade for both goods -

Assume Mexico produced at Pt. C and the U.S. produced at Pt. T before trading.

6. Determine the Terms of Trade between the two countries.