Suppose that each worker in France can produce either 20 units of food per hour or 80 units of machinery per hour. At the same time, workers in Belgium can produce either 80 units of food per hour or 320 units of machinery per hour. Will the two countries trade according to the Ricardian model? If yes, which country will specialize in the production of machinery and which country will specialize in the production of food? In no, why not?
Suppose that each worker in France can produce either 20 units of food per hour or 80 units of machinery per hour. At the same time, workers in Belgium can produce either 80 units of food per hour or 320 units of machinery per hour. Will the two countries trade according to the Ricardian model? If yes, which country will specialize in the production of machinery and which country will specialize in the production of food? In no, why not?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that each worker in France can produce either 20 units of food per hour or 80 units of machinery per hour. At the same time, workers in Belgium can produce either 80 units of food per hour or 320 units of machinery per hour.
Will the two countries trade according to the Ricardian model? If yes, which country will specialize in the production of machinery and which country will specialize in the production of food? In no, why not?
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