Germany can produce either 40 units of pretzels or 20 units of cars per labour hour. Canada can produce either 73 units of pretzels or 10 units of cars per labour hour. Suppose Canada follows its comparative advantage in deciding what to produce and trade with Germany at a trade price of 0.42 units of cars for one unit of pretzel. For every 4320 units of the goods that Canada produces and trades with Germany, what are the gains from trade in terms of the other goods?

Germany can produce either 40 units of pretzels or 20 units of cars per labour hour. Canada can produce either 73 units of pretzels or 10 units of cars per labour hour. Suppose Canada follows its comparative advantage in deciding what to produce and trade with Germany at a trade price of 0.42 units of cars for one unit of pretzel. For every 4320 units of the goods that Canada produces and trades with Germany, what are the gains from trade in terms of the other goods?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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