a. Without trade, what is the price of white socks (in trms of red socks) in Boston? What is the price in Chicago? b. Which city has an absolute advantage in the production of each color sock? Which city has a comparative advantage in the production of each color sock?

Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains Rrom Trade
Section: Chapter Questions
Problem 6PA
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(6.) The following table describes the production possibili-
ties of two cities in the country of Baseballia:
Pairs of Red Socks
Pairs of White Socks
per Worker per Hour
per Worker per Hour
Boston
3
3
Chicago
2
1
a. Without trade, what is the price of white socks
(in trms of red socks) in Boston? What is the
price in Chicago?
b. Which city has an absolute advantage in the
production of each color sock? Which city has a
comparative advantage in the production of each
color sock?
c. If the cities trade with each other, which color sock
will each export?
d. What is the range of prices at
ich trade can
occur?
Transcribed Image Text:(6.) The following table describes the production possibili- ties of two cities in the country of Baseballia: Pairs of Red Socks Pairs of White Socks per Worker per Hour per Worker per Hour Boston 3 3 Chicago 2 1 a. Without trade, what is the price of white socks (in trms of red socks) in Boston? What is the price in Chicago? b. Which city has an absolute advantage in the production of each color sock? Which city has a comparative advantage in the production of each color sock? c. If the cities trade with each other, which color sock will each export? d. What is the range of prices at ich trade can occur?
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