Suppose that each worker in France can produce either 20 units of food per hour or 80 units of machinery per hour. At the same time, workers in Belgium can produce either 80 units of food per hour or 320 units of machinery per hour. Will the two countries trade according to the Ricardian model? If yes, which country will specialize in the production of machinery and which country will specialize in the production of food? In no, why not?

Suppose that each worker in France can produce either 20 units of food per hour or 80 units of machinery per hour. At the same time, workers in Belgium can produce either 80 units of food per hour or 320 units of machinery per hour. Will the two countries trade according to the Ricardian model? If yes, which country will specialize in the production of machinery and which country will specialize in the production of food? In no, why not?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter33: International Trade

Section: Chapter Questions

Problem 8QP

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