Suppose that the comparative-cost rations of two products- babt formula and tuna fish are as follows in the hypothetical nations of Canswicki and Tunata:
Canswicki: 1 can baby formula= 2 cans tuna fish
Tunata: 1 can baby formula= 4 cans tuna fish.
In what product should each nation spexialize? Explain why terms of trade of 1 can baby formula = 2.5 cans tuna fish would be acceptable to both nations?
2006-09-26 13:49:45 · 3 answers · asked by Anonymous in Social Science ➔ Economics
I believe:
Canswicki should specialize in baby formula and Tunata in tuna fish.... Canswicki can use the formula to get more tuna from Tunata than they could make themselves for the same price, and Tunata can get more formula from Canswicki than they could make themselves
The second question, no clue.
2006-09-26 14:01:29 · answer #1 · answered by IAskUAnswer 6 · 0⤊ 0⤋
The second part is because Canswicki could trade 1 can of baby formula for 2 1/2 cans of tuna or gain 1/2 can of tuna.
For the same trade. Tunata could get 2 cans of baby formula for 5 cans of tuna which in their economy is worth 8 cans of tuna. Both nations gain.
2006-09-26 17:06:09 · answer #2 · answered by Roadkill 6 · 1⤊ 0⤋
You just gave me a headache
2006-09-26 14:13:44 · answer #3 · answered by K.O. 4 · 0⤊ 0⤋