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Suppose Bella can produce 1000 kg. of potatoes per year or 200 kg. of meat per year, or linear tradeoffs, and Zach can produce 1500
Suppose Bella can produce 1000 kg. of potatoes per year or 200 kg. of meat per year, or linear tradeoffs, and Zach can produce 1500 kg. of potatoes or 250 kg. of meat per year.
In autarky, who has the higher "real wage" (consumption)?
Can we gain from trade?
If so, what is the direction of trade?
If so, what is the trading range (possible terms of trade)?
Suppose Bella's productivity (and thus real wage) doubles for both products. How does this affect your last two answers, if at all?
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