Question
Consider a global economy with two countries, Gamma and Theta. In Gamma, Bicycles cost $600 to produce, and Snowboards cost $150 to produce. In Theta,
Consider a global economy with two countries, Gamma and Theta. In Gamma, Bicycles cost $600 to produce, and Snowboards cost $150 to produce. In Theta, Bicycles cost $750 to produce, and Snowboards cost $250 to produce. Both countries are operating efficiently and with closed trade borders. Q: If these countries agree to open their borders and trade with one another, is it possible for them to find a mutually beneficial trade agreement? If so, who will focus on bicycles and who will focus on snowboards? Use detailed explanations of comparative advantage and the opportunity costs in this scenario to explain your answers.
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