Name (Print): International Trade Problem Nin Danelin Course : Elon 304 Suppose two countries produce clothing and food. Country A has five units of labor. It can produce 40 units if cloth with one unit of labor. Country A can produce 2 ton of food with one unit of labor. Country B also has five units of labor. It can produce 36 cloth with one unit of labor and 1 ton of food with one unit of labor. Question 1. Show all your work. A Which country has an absolute advantage in the production of cloth? country a , produces, north same amount B. Which country has an absolute advantage in the production of food? country of, produces more w/ save labor C. Which country has a comparative advantage in the production of cloth? 0 /40 c/36/ D. Which country has a comparative advantage in the production of food? kountry A 1/12 1/2 , country B country A E. Plot the production Possibilities curve for country A. F. Plot the production Possibilities curve for country B. Cloth Country A Cloth Country B 182 5. 36= 180 3 3 (0, 180 ) ( 6 , V60 ) 300 5.2= 10 ( 10,0 5 . 1 = 5 270 5. 40 = 200 ( 200, 0) ( 5, 0) 290 210 labor divided 8 between 2-5- 36290 1 80 cloth + food "9, 91 - 50 2.5 2.5. 1 = 2.5 ( 2.5, 90) 120 2.5- 40= 100 90 2.5 . 2:5 60 ( 5, 100 ) Food Food Question 2. Suppose the international price for these two goods (the Terms of Trade) is 30. This means that 30 units of cloth trade for 1 ton of food. A. Plot the consumption possibilities curve for country A (use the original graph in question 1E. B. Would this country be better off or worse off? Explain. I think ons country would be worse off because They're producing within the possibility remind by're not utilizing tuir resources, C. Plot the consumption possibilities curve for country B (use the original graph in question 1F. D. Would this country be better off or worse off? Explain. The corntry would be better off become they're producing outside of thir PPC newing tug're experiencing grower. Question 3. Suppose the international price (Terms of Trade) is now 40. This means that 40 units of cloth trade for 1 ton of food. A. Would these countries want to trade? J B us a comparetie e advantage in food "er explain the counties would want - comtry A amfocus on cloth production which could we conby B specialize through both em experience gain specialization & exchange