Country A has 10 million workers and Country B has 20 million workers. Each worker in Country A can produce 2 units of wine and 4 units of fabric in a year. Each worker in Country B can produce 3 units of wine and 5 units of fabric in a year. a) Which country should import wine? Explain your answer. b) What is the range of trading prices (in terms of fabric) for wine between the two countries?
Country A has 10 million workers and Country B has 20 million workers. Each worker in Country A can produce 2 units of wine and 4 units of fabric in a year. Each worker in Country B can produce 3 units of wine and 5 units of fabric in a year. a) Which country should import wine? Explain your answer. b) What is the range of trading prices (in terms of fabric) for wine between the two countries?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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B1) Country A has 10 million workers and Country B has 20 million workers. Each worker in Country A can produce 2 units of wine and 4 units of fabric in a year. Each worker in Country B can produce 3 units of wine and 5 units of fabric in a year.
a)
Which country should import wine? Explain your answer.
b) What is the range of trading prices (in terms of fabric) for wine between the two countries?
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Opportunity costs show the potential benefits that an individual, investor, or business misses out on when choosing one substitute over another. Because opportunity costs are unseen by definition, they can be easily ignored.
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