11. An average worker in Brazil can produce 30 mL of soy milk in 20 minutes and...

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11. An average worker in Brazil can produce 30 mL of soy milk in 20 minutes and 30 mL of coffee in 60 minutes, while an average worker in Peru can produce 30 mL of soy milk in 50 minutes and 30 mL of coffee in 75 minutes.

a. Who has the absolute advantage in coffee? Explain.

b. Who has the comparative advantage in coffee? Explain.

c. If the two countries specialize and trade with each other, who will import coffee? Explain.

d. Assume that the two countries trade and that the country importing coffee trades 60 mL of soy milk for 30 mL of coffee. Explain why both countries will benefit from this trade.

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Principles Of Macroeconomics

ISBN: 9780176591977

7th Canadian Edition

Authors: N. Mankiw, Ronald Kneebone, Kenneth McKenzie

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