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Here's another problem on international trade. Brazil and South Africa each produce sugar and iron ore. Assume once more that every worker is capable
Here's another problem on international trade. Brazil and South Africa each produce sugar and iron ore. Assume once more that every worker is capable of producing either sugar or iron, but that the number of workers required to produce a ton of each good will differ across countries. It takes 2 workers to produce a ton of sugar in Brazil, but it takes 6 to do so in South Africa. Conversely, it takes 4 workers to produce a ton of iron in Brazil, but only 3 in South Africa. 56 workers are available for hire in Brazil, and 48 in South Africa. Who holds the comparative advantage in sugar? [B1]. (Either "Brazil" or "South Africa" here, without the quotes.) Who holds the comparative advantage in iron? [SA1]. Who holds the absolute advantage in sugar? [B2]. Who holds the absolute advantage in iron? [SA2].
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