1. Suppose that 1 unit of labor is Asia can be used to produce 10 units of food or 5 units of clothing. Also suppose that 1 unit of labor in South America can be used to produce 4 units of food or 1 unit of clothing.
2. Which country has an absolute advantage in food? In clothing? (2 points)
3. What is the relative cost of producing food in Asia? In South America? (2 points)
4. Which country will export food? Clothing? (2 points)
5. Draw the production possibilities frontier for each country if Asia has 10 units of labor and South America has 20 units of labor. (2 points)
6. What is the range for the final terms of trade between the two countries? (1 point)