Question
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?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started