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Problem 1 Assume that the comparative-cost ratios of two productsbaby formula and tuna sh are as follows in the nations of Wand Mata: W: 1

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Problem 1 Assume that the comparative-cost ratios of two productsbaby formula and tuna sh are as follows in the nations of Wand Mata: W: 1 can baby formula E 2 cans tuna sh Mata: 1 can baby formula E 4 cans tuna sh In what product should each nation specialize? Which of the following terms of trade would be acceptable to both nations: (a) 1 can baby formula E 2 1/2 cans tuna sh; (b) 1 can baby formula E 1 can tuna sh; (c) 1 can baby formula 5 5 cans tuna sh

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