Question
Suppose that Bandor (Kiribati) can produce 150 tonnes of corn or 100 tonnes of avocado. Suppose that Gwenor (Tuvalu) can produce 90 tonnes of corn
- Suppose that Bandor (Kiribati) can produce 150 tonnes of corn or 100 tonnes of avocado. Suppose that Gwenor (Tuvalu) can produce 90 tonnes of corn or 200 tonnes of avocado. (10 marks)
(a)What is the opportunity cost of 1 unit of avocado in Bandor? Show your work.
(b)What is the opportunity cost of 1 unit of avocado in Gwenor? Show your work.
(c)Which country has a comparative advantage in producing avocado? Explain why.
(d)Suppose that trade takes place between Bandor and Gwenor. Which good will Bandor import from Gwenor? Explain why.
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Power And Plenty Trade, War, And The World Economy In The Second Millennium
Authors: R Findlay, Ronald Findlay
1st Edition
0691143277, 9780691143279
