Output per unit of labor

Mexico Nicaragua

Coffee108

Wheat20 8

Which country has absolute advantage in the production of coffee/wheat?

Which country has comparative advantage in the production of coffee/wheat?

What might cause the terms of trade for Mexico to improve?

3.In the case below, explain carefully the effect [increase (+); decrease (-); indeterminant (ind)] upon equilibrium price (P) and equilibrium quantity (Q). Feel free to illustrate the changes graphically. Where you believe the effect is indeterminant, be sure to explain.

Car industry in the U.S.: COVID-19 forces more people to work from home and, at the same time, automobile companies suspend production at some of their factories due to the pandemic.