Assume that there are two Countries, Gabon and Togo. Togo can either produce 100 tons of Palm oil or 120 meters of cloth using their resources to the maximum and most efficiently. Gabon on the other hand can produce either 180 tons of palm oil or 50 meters of cloth using all their resources to the maximum and most efficiently. Assume that both countries experience constant opportunity cost in production: i) Draw PPF for each country placing palm oil on the y-axis. ii) Identify the comparative advantage for each country. Explain in terms of opportunity cost. iii) Indicate the trend of trade if the two countries had to trade
Assume that there are two Countries, Gabon and Togo. Togo can either produce 100 tons of Palm oil or 120 meters of cloth using their resources to the maximum and most efficiently. Gabon on the other hand can produce either 180 tons of palm oil or 50 meters of cloth using all their resources to the maximum and most efficiently. Assume that both countries experience constant opportunity cost in production: i) Draw PPF for each country placing palm oil on the y-axis. ii) Identify the comparative advantage for each country. Explain in terms of opportunity cost. iii) Indicate the trend of trade if the two countries had to trade
Chapter28: International Trade
Section: Chapter Questions
Problem 7P
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Assume that there are two Countries, Gabon and Togo. Togo can either produce 100 tons of Palm oil or 120 meters of cloth using their resources to the maximum and most efficiently. Gabon on the other hand can produce either 180 tons of palm oil or 50 meters of cloth using all their resources to the maximum and most efficiently. Assume that both countries experience constant
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