Germany can produce either 40 units of pretzels or 20 units of cars per labour hour. Canada can produce either 73 units of pretzels or 10 units of cars per labour hour. Suppose Canada follows its comparative advantage in deciding what to produce and trade with Germany at a trade price of 0.42 units of cars for one unit of pretzel. For every 4320 units of the goods that Canada produces and trades with Germany, what are the gains from trade in terms of the other goods?

Germany can produce either 40 units of pretzels or 20 units of cars per labour hour. Canada can produce either 73 units of pretzels or 10 units of cars per labour hour. Suppose Canada follows its comparative advantage in deciding what to produce and trade with Germany at a trade price of 0.42 units of cars for one unit of pretzel. For every 4320 units of the goods that Canada produces and trades with Germany, what are the gains from trade in terms of the other goods?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 2SCQ: Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40...

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