What is one possible price of capital-intensive goods (in terms of labor-intensive goods) that would make BOTH countries better off as the result of trade?
What is one possible price of capital-intensive goods (in terms of labor-intensive goods) that would make BOTH countries better off as the result of trade?
Chapter20: International Trade
Section20.1: International Trade Theory
Problem 1ST
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Suppose Country A can produce 200 tons of capital-intensive goods or 200 tons of labor-intensive goods in one day. Suppose Country B can produce 80 tons of capital-intensive goods or 160 tons of labor-intensive goods in one day.
What is one possible price of capital-intensive goods (in terms of labor-intensive goods) that would make BOTH countries better off as the result of trade?
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