Suppose Argentina (A) and Bolivia (B) only trade with each other and they both produce the same two goods: grocery (G) and fish (F). Given its resources, Argentina can produce either 2 units of grocery per day or 1 unit of fish; Bolivia can produce either 5 units of grocery or 4 units of fish. a. If there were no trade, what would be the local price of fish in each country, measured in units of grocery? b. If trade is allowed, which country will export fish and which country will export grocery (if any)? c. Suppose Argentina offers to buy fish from Bolivia for 1.20 units of grocery. Does Bolivia accept the trade? Why or why not? d. With trade, what are the bound of the price of fish, measured in units of grocery?

Suppose Argentina (A) and Bolivia (B) only trade with each other and they both produce the same two goods: grocery (G) and fish (F). Given its resources, Argentina can produce either 2 units of grocery per day or 1 unit of fish; Bolivia can produce either 5 units of grocery or 4 units of fish. a. If there were no trade, what would be the local price of fish in each country, measured in units of grocery? b. If trade is allowed, which country will export fish and which country will export grocery (if any)? c. Suppose Argentina offers to buy fish from Bolivia for 1.20 units of grocery. Does Bolivia accept the trade? Why or why not? d. With trade, what are the bound of the price of fish, measured in units of grocery?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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