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Suppose Taiwan and Germany produce only cell phones and digital music players. Assume that each country uses only labor to produce each good, and
Suppose Taiwan and Germany produce only cell phones and digital music players. Assume that each country uses only labor to produce each good, and that the cell phones and digital music players made in Taiwan and Germany are exactly alike. The table below shows how much each country can produce of each good with one hour of labor: Output per Hour of Labor Cell Phones 22 Digital Music Players Taiwan 12 Germany 5 7 Suppose that Taiwan and Germany do not trade with each other. Each has 500 hours of labor with which to produce cell phones and digital music players, and the countries are currently producing amounts of each good shown in the table below: Consumption with 500 Hours of Labor Cell Phones Digital Music Playors Taiwan 9,900 600 Germany 600 2,660 Assume now that each country specializes in producing that good in which it has a comparative advantage. Further, assume for simplicity that one cell phone can be traded for one digital music player. If Taiwan trades 600 cell phones for 600 digital music players with Germany, then, with trade, Taiwan will be able to consume the same number of digital music players and additional cell phones (enter a numeric response using an integer)
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