Assume that the comparative-cost ratios of two products—baby formula and tuna fish—are as follows in the...
Assume that the comparative-cost ratios of two
products—baby formula and tuna fish—are as follows in the nations
of Canswicki and Tunata:
Canswicki: 1 can baby formula = 4 cans tuna fish
Tunata: 1 can baby formula = 6 cans tuna fish
1) In what product should each nation
specialize?
a) Canswicki should produce: _____
b) Tunata should produce: _____
2) Would the following terms of trade be acceptable to both
nations?
a. 1 can baby formula ≡ 3 cans tuna fish:
Acceptable or Not acceptable
b. 1 can baby formula ≡ 7 can tuna
fish: Acceptable or Not acceptable
c. 1 can baby formula ≡ 4.5 cans tuna fish:
Acceptable or Not acceptable
Homework Answers
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