The countries of Guatemala and Belize have labor forces that produce wool and rice. Half of the
Question:
The countries of Guatemala and Belize have labor forces that produce wool and rice. Half of the labor force in both countries produces wool and the other half of the labor force produces rice. The table below summarizes the quantity of wool and rice produced before international trade existed.
Total Outputs Before trade
Country
Total Number of Bushels per Day
Wool
Rice
Guatemala
25
20
Belize
5
40
Total Output Before trade
30
60
Assume each country decides to engage in international trade and to specialize in the industry (either wool production or rice production) that they are best at producing. The table below summarizes their area of specialization and the quantity produced.
Total Outputs After Trade
Countries
Total Number of Bushels per day
Wool
Rice
Guatemala
40
0
Belize
0
70
Total Output After Trade
40
70
Required:
a.)In which industry does each country have a comparative advantage? (2 marks)
a.Comparative advantage for Guatemala?
b.Comparative advantage for Belize?
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