Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose that a worker in China can grow either 40 units of coffee or 10 units of oranges per year, and a worker in Oman

image text in transcribed

image text in transcribed
Suppose that a worker in China can grow either 40 units of coffee or 10 units of oranges per year, and a worker in Oman can grow either 5 units of coffee or 50 units of oranges per year. There are 20 workers in China and 20 workers in Oman. If the two countries do not trade, China will produce and consume 400 units of coffee and 100 units of oranges, while Oman will produce and consume 50 units of coffee and 500 units of oranges. Combined output for the two countries would therefore be 450 units of coffee and 600 units of oranges. If the two countries do trade, each will completely specialize in producing the good for which it has a comparative advantage. If trade occurs, combined output for the two countries will increase by O 350 units of coffee and 400 units of oranges. O 400 units of coffee and 350 units of oranges. O There would not be any increase. O 800 units of coffee and 1000 units of oranges

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Jan Williams, Susan Haka

17th Edition

126000645X, 9781260006452

More Books

Students also viewed these Economics questions