Assume that the US and Mexico produce coffee and wheat. One hour of labour in Mexico

can produce 6 lbs of coffee or 10 lbs of wheat. In the US, one hour of labour can produce 8

lbs of coffee or 15 lbs of wheat.

a) Which country has the comparative advantage in the production of each good?

b) Given your answer to a), explain how each country is better off with trade than

without?

c) If labour productivity doubles in Mexico (12lbs of coffee or 20 units of wheat), does

your answer to b) change? (Explain why or why not)