Macroeconomics 1st Edition by Campbell McConnell,Stanley Brue,Sean Flynn

Exercise 3

The following are production possibilities tables for South Korea and the United States. Assume that before specialization and trade the optimal product mix for South Korea is alternative B and for the United States alternative U.
c. What are the limits of the terms of trade Suppose actual terms of trade are 1 unit of LCD displays for 1½ units of chemicals and that 4 units of LCD displays are exchanged for 6 units of chemicals. What are the gains from specialization and trade for each nation