Suppose Bolivia and Peru are considering a trade pact. They each have exactly the same amount of
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Question:
Suppose Bolivia and Peru are considering a trade pact. They each have exactly the same amount of resources, 100% of which is devoted to producing fresh fruit and natural gas according to the following production capabilities.
PERU BOLIVIA
Fresh Fruit 15 30
Natural Gas 30 50
Without trade, they each devote 50% of their productivity to each product.
W/O Trade: Produce and Consume
PERU BOLIVIA TOTAL
Fruit 7.5 15 22.5
Natural Gas 15 25 40
What is the most efficient way of organizing their production after they enter the trade pact?(Don't worry about how much each trades to the other, or how much each consumes. Just determine how much fruit and natural gas each should produce.)
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