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Ricardian Model exercise. Imagine Country A and B produce only Pizza and Beer with the following productivities Pizza Beer Country A 6 hrs./slice 2 hrs./pint

Ricardian Model exercise. Imagine Country A and B produce only Pizza and Beer with the following productivities

Pizza Beer

Country A 6 hrs./slice 2 hrs./pint

Country B 3 hrs./slice 4 hrs./pint

1) Which country has an absolute advantage in pizza?

2)Which country has an absolute advantage in beer?

3)If trade takes place between both countries at a barter price of 1 pint of beer for 1/2 slice of pizza, do both countries gain from trade? Why?

4) If trade takes place between both countries at a barter price of 1 pint of beer for 3 slice of pizza, do both countries gain from trade? Why?

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