PoorcountryRichcountryWheat Cloth68220(a) What are the opportunity cost ratios for these two countries?(b) Show how each country could gain from trade if the poor countrycould produce (before trade) 3 wheat for 1 cloth and the developedcountry could produce (before trade) 2 wheat for 5 cloth, and if theexchange ratio (with trade) was 1 wheat for 2 cloth.(c) Would they both still gain if the exchange ratio was (1) 1 wheat for 1cloth; (2) 1 wheat for 3 cloth?

opportunity cost is the cost for gaining one opportunity , loose the other opportunity or we can say…

Poor country Rich country Wheat Cloth 6 8 2 20 (a) What are the opportunity cost ratios for these two countries? (b) Show how each country could gain from trade if the poor country could produce (before trade) 3 wheat for 1 cloth and the developed.

Poor country Rich country Wheat Cloth 6 8 2 20 (a) What are the opportunity cost ratios for these two countries? (b) Show how each country could gain from trade if the poor country could produce (before trade) 3 wheat for 1 cloth and the developed.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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