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The opportunity costs could be computed as: Aircraft Corn =1/500=0.002 air Beta =500/1=500 corn craft =2/300=0.0067 ai Gamma =300/2=150 corn rcraft

The opportunity costs could be computed as: Aircraft Corn =1/500=0.002 air Beta =500/1=500 corn craft =2/300=0.0067 ai Gamma =300/2=150 corn rcraft

Macroeconomics: Private and Public Choice (MindTap Course List)
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter18: Gaining From International Trade
Section: Chapter Questions
Problem 12CQ
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The opportunity costs could be computed as: Aircraft Corn =1/500=0.002 air Beta =500/1=500 corn craft =2/300=0.0067 ai Gamma =300/2=150 corn rcraft Beta: 1 Aircraft=500 corn, 1 corn=0.002 aircraft Gamma: Aircraft=150 corn, 1 corn=0.0067 aircraft
Transcribed Image Text:The opportunity costs could be computed as: Aircraft Corn =1/500=0.002 air Beta =500/1=500 corn craft =2/300=0.0067 ai Gamma =300/2=150 corn rcraft Beta: 1 Aircraft=500 corn, 1 corn=0.002 aircraft Gamma: Aircraft=150 corn, 1 corn=0.0067 aircraft
If these two nations trade, what good should each specialize in and export to the other? What would be the range for the terms of trade (price of aircraft in terms of corn, for example) that would make both nations benefit economically from trade?
Transcribed Image Text:If these two nations trade, what good should each specialize in and export to the other? What would be the range for the terms of trade (price of aircraft in terms of corn, for example) that would make both nations benefit economically from trade?
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