Posted by rimm on .
Mexico produce only two goods, fish and coconuts. They only consume goods
produced within their own country and do not trade with anyone. However Mexico needs more fish now.if they produce more fish they have to give up more coconuts. In the neighbor country, Canada has lower relative price in fish.Mexico and Canadian president sign agreement for trade.
Economics says that relative price in fish will fall in mexico after the agreement.
1. Will the mexican economy produce more or less fish after agreement? Will the mexican economy produce more or less coconut after agreement?
2. According to first answer will the agreement help or hurt Mexico
fishers? Will agreement help or hurt mexican coconut producers>?