This is a file upload question. Please hand-write your solut…
This is a file upload question. Please hand-write your solution in a piece of paper, take a picture and upload your file (or send me through Canvas Inbox or at haruko.muratainouye@chaffey.edu). Typed answers will not be accepted! The table below shows the production of beef (in pounds) and autos of one worker in Argentina and in Mexico: One worker can produce Beef (in pounds) Autos Argentina 100 10 Mexico 40 30 Suppose that before trade (or without trade) each country has 50 workers and they each allocate 25 workers for the production of beef and 25 workers for the production of autos. Find the maximum production and consumption of both goods for each country. If the countries decide to engage in trade (with trade), they will specialize in the production of the good in which they have comparative advantage. In which good should Argentina specialize? How about Mexico? Justify! (To answer this question you must calculate the opportunity cost of each good for both countries and then find the country’s comparative advantage). What is the with trade production of the countries? If the countries decide to engage in trade the Terms-of-Trade will be set at 1,500 pounds of beef for 300 autos. With this information complete the tables below (show your work!): Argentina’s gains from trade ARG Produce Consume Gains from Trade Beef Autos Mexico’s gains from trade MEX Produce Consume Gains from Trade Beef Autos Words: 4 Characters: 26
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