Freedonia has a comparative advantage in the production of production of , while Sylvania has a comparative advantage in the Suppose that Freedonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of lemons and million pounds of tea. Suppose that Freedonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 20 million pounds of lemons for 20 million pounds of tea. This ratio of goods is known as the price of trade between Freedonia and Sylvania.

Freedonia has a comparative advantage in the production of production of , while Sylvania has a comparative advantage in the Suppose that Freedonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of lemons and million pounds of tea. Suppose that Freedonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 20 million pounds of lemons for 20 million pounds of tea. This ratio of goods is known as the price of trade between Freedonia and Sylvania.

Name: 4. Specialization and tradeWhen a country has a comparative advantage
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Description: 4. Specialization and tradeWhen a country has a comparative advantage in the production of a good, It means that it can produce this good at a lower opportunity cost than Itstrading partner. Then the country will specialize in the production of this

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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