Bharti Singla
Senior Member
The goods can be produced by two countries with given resources are as follows:
Wine Bread
A 10 20
B 4 16
(i) Which country should specialize in the production of bread?
(ii) Calculate the global production of bread and wine by both countries after complete specialization.
(iii) Select an appropriate terms of trade of units of bread for units of wine and demonstrate why both countries can be better off after specialization and exchange.
I got the answer to part(i) and (ii).
(i) country B
(ii) Country A would produce 20 units of wine and Country B would produce 32 units of bread.
Could anyone please help with part(iii)?
Thanks
Wine Bread
A 10 20
B 4 16
(i) Which country should specialize in the production of bread?
(ii) Calculate the global production of bread and wine by both countries after complete specialization.
(iii) Select an appropriate terms of trade of units of bread for units of wine and demonstrate why both countries can be better off after specialization and exchange.
I got the answer to part(i) and (ii).
(i) country B
(ii) Country A would produce 20 units of wine and Country B would produce 32 units of bread.
Could anyone please help with part(iii)?
Thanks