Question

Two countries produce t-shirts and wheat. One country can produce either 30 million bushels of wheat or 10 million t-shirts with its resources. The other country can produce either 25 million bushels of wheat or 5 million t-shirts with its resources. If the two countries were to engage in specialization and trade you would expect 5 t-shirts to trade for how many bushels of wheat? Please explain!

Answer 1

This should be in the economics section, but I'll hep you now.

Answer 2

First, you must set up a chart showing the production of each country

Answer 3

Btw, \[\Huge\bf \color{yellow}{Welcome~\to~OpenStudy!!}\hspace{-310pt}\color{cyan}{Welcome~\to~OpenStudy!!}\hspace{-307.1pt}\color{midnightblue}{Welcome~\to~\color{purple}{Open}}\color{blue}{Study!!!!}\]

Answer 4

Sorry im new! didn't even realize

Answer 5

Lets call the first country A and the second country B Taking the info from the question, we get that

Answer 6

Do you follow so far?

Answer 7

yes

Answer 8

Ok, we're using this one becuase I put the numbers too high for what I was going to do.

Answer 9

Now the first thing to understand is what kind of question this is. There are output and input questions when it comes to trade:

Input goes along the lines of: How long it takes, how many resources, etc it takes to make n outputs (so a fixed amount of something is made with a varable amount of inputs)

Output goes along of lines of: How much of n is made given these set amount of resources or using all of their resouces (so a fixed amount inputs are used, while the outpput is variable, since someone could make more in an hour than someone else)

Now you tell me, what kind of question are we dealing with here, input or output?

Answer 10

Output

Answer 11

Sorry, but yes good job! Now we are going to calculate comparative advantage for these values. Basically the comp. advantage just tells you which country has to give up less ofone good to make another. It is also seen as who has the smallest opportunity cost of roducing the product. Now for the "output method", we take the numbers and we shoot them out as shown below