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The following table describes the production possibilities of two cities in the country of Baseballia: a. Without trade, what is the price of white socks (in terms 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 which trade can occur?

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Principles of Microeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971493
BuyFind

Principles of Microeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971493

Solutions

Chapter
Section
Chapter 3, Problem 6PA
Textbook Problem

The following table describes the production possibilities of two cities in the country of Baseballia:

Chapter 3, Problem 6PA, The following table describes the production possibilities of two cities in the country of

a. Without trade, what is the price of white socks (in terms 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 which trade can occur?

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