Homework Help: econ question about Trade

Posted by tofu on Saturday, February 10, 2007 at 7:35pm.

The following table provides date on the productivity of a single unit of resource in producing wheat and microchips in both canada and jpn
wheat microships
canada 50 20
jpn 2 12

now if terms of trade was 2 microships for one tonne of wheat. Which country would benefit?? explain

Since we can't see the table, we really can't help you with this question.

I believe Ms Sue, the table is a simple 2x2 table, row are countries canada and jpn, columns are products wheat and microchips.

To answer, calculate the price of microchips in terms of wheat in both countries. In canada, to get 1 microchip, it must give up 2.5 units of wheat. Do the same calculation for jpn.

In terms of trade, what will each country do. Hint: Both countries benefit. One country will make chips and trade for wheat, the other will make wheat and trade for chips.

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