Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 4 oranges, then: there are no incentives for Beta to engage in international specialization and trade with Alpha. it is in the interest of Beta to grow oranges and trade for apples. it is in the interest of both countries to specialize and trade with one another. there are no incentives for Alpha or Beta to specialize and trade with one another.

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 4 oranges, then: there are no incentives for Beta to engage in international specialization and trade with Alpha. it is in the interest of Beta to grow oranges and trade for apples. it is in the interest of both countries to specialize and trade with one another. there are no incentives for Alpha or Beta to specialize and trade with one another.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 6CQQ

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Similar questions

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