Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

There are two countries, Blue and Red. Both of them produce cheese and tomatoes. Consider the no-trade input/output situation presented in the following table regarding

image text in transcribed
There are two countries, Blue and Red. Both of them produce cheese and tomatoes. Consider the no-trade input/output situation presented in the following table regarding two countries. INPUT/OUTPUT WITHOUT TRADE Country Blue Red Total I. Units of Input Cheese 100 50 Tomatoes 60 30 II. Output per Unit of Input (kg) Cheese 10 Tomatoes 50 20 III. Total Output (kg) Cheese 1.000 250 1.250 Tomatoes 3,000 600 3.600 IV. Consumption (kg) Cheese 1.000 250 1,250 Tomatoes 3.000 600 3,600 (a) Compute country Blue and Red's opportunity costs of producing cheese. (b) When free trade is allowed, develop a scenario in which citizens of both countries would be better off (make a new table of input/output with trade)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Matching Supply with Demand An Introduction to Operations Management

Authors: Gerard Cachon, Christian Terwiesch

3rd edition

73525200, 978-0073525204

Students also viewed these Economics questions