Suppose that there are two products: clothing and soda. Both Brazil and the United States produce each product. Brazil produces 100,000 units of clothing per year and 50,000 cans of soda. The United States produces 65,000 units of clothing per year and 250,000 cans of soda. Assume that costs remain constant.
What would be the production possibility frontiers for Brazil and the United States?
Without trade, the United States produces 45,000 units of clothing and 150,000 cans of soda.
Without trade, Brazil produces 75,000 units of clothing and 30,000 cans of soda.
Denote these points on each other’s production possibility frontier.
What is the marginal transformation rate for each country?
Should the two countries specialize and trade?
If so, who has the comparative advantage in what product?
Once they specialize, how much does output increase?
What are the terms of trade if the United States trades 1 can of soda for 5 units of clothing?
Are the consumers in each country better off?
What is the labor-intensive good?
What is the labor-abundant country?
What is the capital-abundant country?
Could trade help reduce poverty in Brazil and other developing countries?
How do product and factor prices and wages eventually equalize between the two countries?
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more