Suppose there are two countries for analyses, the United States and Indonesia. Assume that 2000 man hours are available in the United States and 36000 in Indonesia. The following table provides information on how many man-hours are needed to produce one unit of the same goods. IndonesiaUnited StatesCloth503Machines1005 2.5 Indonesia is a developing country and the United States a developed country. Do you think Indonesia benefits from trade with the United States? What should the trade ratio be for Indonesia to benefit from trade.

Absolute advantage refers to a situation in which a country can create a product or provide a…

Answered: Suppose there are two countries for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose there are two countries for analyses, the United States and Indonesia. Assume that 2000 man hours are available in the United States and 36000 in Indonesia. The following table provides information on how many man-hours are needed to produce one unit of the same goods.

	Indonesia	United States
Cloth	50	3
Machines	100	5

2.5 Indonesia is a developing country and the United States a developed country. Do you think Indonesia benefits from trade with the United States? What should the trade ratio be for Indonesia to benefit from trade.

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