Question
Imagine a world with two countrics: the US and Mexico. There are two goods: avocados (A) and corn (C). There is one factor of
Imagine a world with two countrics: the US and Mexico. There are two goods: avocados (A) and corn (C). There is one factor of production: labor (L). The MPL for corn and avocados is as follows: Country USA MEX MPLA MPLe Opp. Cost of A Opp. Cost of C (1) What is the opportunity cost. of corn and avocados in the two countries? Report. your answer in the table above. (2) What country has absolute advantage in corn? In avocados? (3) What country has comparative advantage in corn? In avocados? (4) What is the autarky relative price of corn in the US, and in Mexico?
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Microeconomics and Behavior
Authors: Robert Frank
9th edition
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