Washington can grow 1 grape or 26 apple bushels per acre and California can grow 20 of either.

1) For Washington to grow one grape, it must give up __ apples.

2) For California to grow one grape, it must give up __ apple.

3) grows 1 grape and 26 apples for every two acres.

Before trade CaThe absolute advantage in apple production is had by:

4) The absolute advantage in grape production is had by:

5) The comparative advantage in apple production is had by:

6) The comparative advantage in grape production is had by:

7) The difference in apples each state must sacrifice to grow a bushel of grapes is __

8) The square route of this difference equals __ apples for each grape- and this is our terms of trade- though there are other ways to calculate terms of trade so long as both states benefit.

Before trade Wash l grows 20 grapes and 20 apples for every two acres.

Now with trade Wash grows 52 apples per two acres and sends 25 to Cal.

9) Now with trade Cal grows 40 grapes for every two acres and sends __ grapes in return for the 25 apples.

10) Finally Wash ends up with ___ apples and ___ grapes versus 26 apple and 1 grape,

which gives a trade gain of ___ apples and ___ grapes.

11) Finally Cal ends up with ___ apples and ___ grapes versus 20 apple and 20 grapes,

which gives a trade gain of ___ apples and ___ grapes.

answers: 1 1 4 5 5 5 5 15 25 25 26 27 35 Cal Cal Wash Wash