Suppose that in Chile, one unit of labor can produce either 6 bottles of wine or 9 pounds of sugar while in Mexico , one unit of labor can produce either 4 bottles of wine or 8 pounds of sugar. Given this information, which of the following statements accurately describes the pattern of specialization and trade between the two countries?

a.
Mutually beneficial trade can occur : Chile will specialize in the production of wine and Mexico will specialize in the production of sugar
b.
Mutually beneficial trade isn't possible because Chile can produce more of both goods per unit of labor than Mexico can.
c.
Mutually beneficial trade cannot occur because Chile and Mexico have the same opportunity cost of producing both goods.
d.
Mutually beneficial trade is possible: Chile will specialize in the production of sugar and Mexico will specialize in the production of wine.

Question

Suppose that in Chile, one unit of labor can produce either 6 bottles of wine or 9 pounds of  sugar while in Mexico , one unit of labor can produce either 4 bottles of wine or 8 pounds of sugar. Given this information, which of the following statements accurately describes the pattern of specialization and trade between the two countries?

a.	
Mutually beneficial trade can occur : Chile will specialize in the production of wine and Mexico will specialize in the production of sugar
b.	
Mutually beneficial trade isn't possible because Chile can produce more of both goods per unit of labor than Mexico can.
c.	
Mutually beneficial trade cannot occur because Chile and Mexico have the same opportunity cost of producing both goods.
d.	
Mutually beneficial trade is possible: Chile will specialize in the production of sugar and Mexico will specialize in the production of wine.

anonymous · Answer

B