The Power of Trade and Comparative Advantage: Work It Out 7Here's another specialization and exchange problem. This problem is wholly made-up, so that you won't be able to use yourintuition about the names of countries or the products to figure out the answer.Consider the following productivity table:MandoviaDucenniaNumber of Hours to Make One Rotid50150f. This time, the trade negotiations turn out differently: It's two rotids for one tauron. Have the correct country ship 10million rotids, have the other send 5 million taurons, and fill in the numbers. Are both countries better off than if there wereno trade? Which country likes this trade deal better than the deal from part e?Consumption of rotids for Mandovia:Total rotid consumption:Number of Hours to Make One Tauron100200Consumption of taurons for Mandovia:Consumption of rotids for Ducennia:Consumption of taurons for Ducennia: Both countriesof goods without any trade.better off than when there was no trade:could have the same combinationlikes these prices better than the first set of prices.

Here we can, determine the opportunity costs for each country:Mandovia:Opportunity cost of 1 Rotid =…

Answered: Both countries of goods without any…

Both countries of goods without any trade. better off than when there was no trade: could have the same combination likes these prices better than the first set of prices.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The Power of Trade and Comparative Advantage: Work It Out 7
Here's another specialization and exchange problem. This problem is wholly made-up, so that you won't be able to use your
intuition about the names of countries or the products to figure out the answer.
Consider the following productivity table:
Mandovia
Ducennia
Number of Hours to Make One Rotid
50
150
f. This time, the trade negotiations turn out differently: It's two rotids for one tauron. Have the correct country ship 10
million rotids, have the other send 5 million taurons, and fill in the numbers. Are both countries better off than if there were
no trade? Which country likes this trade deal better than the deal from part e?
Consumption of rotids for Mandovia:
Total rotid consumption:
Number of Hours to Make One Tauron
100
200
Consumption of taurons for Mandovia:
Consumption of rotids for Ducennia:
Consumption of taurons for Ducennia:

Both countries
of goods without any trade.
better off than when there was no trade:
could have the same combination
likes these prices better than the first set of prices.

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