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Assume that Country A and Country B use only labor to produce two goods: food and clothing. To produce one unit of food, Country A
Assume that Country A and Country B use only labor to produce two goods: food and clothing. To produce one unit of food, Country A uses 1 unit of labor and Country B uses 4 units of labor. To produce one unit of clothing, Country A uses 3 units of labor and Country B uses 8 units of labor.
(iii)If the terms of trade are set at one unit of clothing for 2.5 units of food, what is the gain from trade of Country A in terms of time saved in producing one unit of food and one unit of clothing?(6 marks)
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