Question
Assume that Jane's Island produces and consumes 2 pounds of corn and 2 yards of cloth. Joe's Island produces and consumes 2 pounds of corn
Assume that Jane's Island produces and consumes 2 pounds of corn and 2 yards of
cloth. Joe's Island produces and consumes 2 pounds of corn and 2 yards of cloth. Now the islands completely specialize and trade. a. What good should Jane sell to Joe and what good should Jane buy from Joe? b. If, after specialization, Jane and Joe divide the total output of corn and cloth equally, what are the gains from trade?
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Economics of Strategy
Authors: David Besanko, David Dranove, Mark Shanley, Scott Schaefer
6th edition
978-1118273630, 111827363X, 978-1118319185
