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The Dominican Republic and Nicaragua both produce coffee and rum. The Dominican Republic can produce 16 thousand tons of coffee or 4 thousand barrels of

The Dominican Republic and Nicaragua both produce coffee and rum. The Dominican Republic can produce 16 thousand tons of coffee or 4 thousand barrels of rum per year. Nicaragua can produce10 thousand tons of coffee or 2 thousand barrels of rumper year.

a. Suppose the Dominican Republic and Nicaragua sign a trade agreement in which each country would specialize in the production of either coffee or rum.

Which country should specialize in coffee?

  • Nicaragua
  • The Dominican Republic

Which country should specialize in rum?

  • Nicaragua
  • The Dominican Republic

b. The minimum price at which these countries will tradecoffee is_________tons ofbarrels of rum, and the maximum price is___________tons ofbarrels of rum. (3 decimal places)

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