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The table below depicts output per hour worked for steel and aluminum in Peru and Brazil. Units of output per hour worked Country Good Argentina
The table below depicts output per hour worked for steel and aluminum in Peru and Brazil. Units of output per hour worked Country Good Argentina Brazil Steel 12 2 Aluminum 6 3 a. Under autarky, what is the relative price of steel to aluminum (Ps/PA) in the two countries? Explain. b. Which country has a comparative advantage in the production of steel? In the production of aluminum? Explain. c. List the range of relative world prices of steel to aluminum where trade would be beneficial for both countries. d. If the relative world price increases towards the upper limit of the range in part c., which country will gain more from trade? Explain
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