What is the cost ratio of capital goods to consumer goods in Germany? What is the cost ratio of capital goods to consumer goods in France?Solve for a terms of trade ratio that will be mutually beneficial for both nations so that they will want to engage in trade with one another. GermanyOption Consumer Goods Capital Goods0ABCDE400,000300,000200,000100,000025,00050,00075,000100,000FranceConsumer Goods Capital Goods01,200,000900,000600,000300,0000150,000300,000450,000600,000

This question is from the comparative advantage theory of International trade. Cost ratio can be…

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ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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What is the cost ratio of capital goods to consumer goods in Germany? What is the cost ratio of capital goods to consumer goods in France?
Solve for a terms of trade ratio that will be mutually beneficial for both nations so that they will want to engage in trade with one another.

Germany
Option Consumer Goods Capital Goods
0
ABCDE
400,000
300,000
200,000
100,000
0
25,000
50,000
75,000
100,000
France
Consumer Goods Capital Goods
0
1,200,000
900,000
600,000
300,000
0
150,000
300,000
450,000
600,000

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