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Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
Edition 20ISBN: 978-0077660772Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
Edition 20ISBN: 978-0077660772 Exercise 8
Assume that the comparative-cost ratios of two products-baby formula and tuna fish-are as follows in the nations of Canswicki and Tunata:
Canswicki: 1 can baby formula ? 2 cans tuna fish
Tunata: 1 can baby formula ? 4 cans tuna fish
In what product should each nation specialize? Which of the following terms of trade would be acceptable to both nations: (a) 1 can baby formula ? 2 1/2 cans tuna fish; (b) 1 can baby formula ? 1 can tuna fish; (c) 1 can baby formula ? 5 cans tuna fish?
Canswicki: 1 can baby formula ? 2 cans tuna fish
Tunata: 1 can baby formula ? 4 cans tuna fish
In what product should each nation specialize? Which of the following terms of trade would be acceptable to both nations: (a) 1 can baby formula ? 2 1/2 cans tuna fish; (b) 1 can baby formula ? 1 can tuna fish; (c) 1 can baby formula ? 5 cans tuna fish?
Explanation
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Verified
Canswicki needs to forgo 2 cans of tuna ...
Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
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