I need help with #2 please The following information can be used to answer quest

Question

I need help with #2 please

The following information can be used to answer questions 13 and 14. Canada and Mexico can each produce either cloth or wheat or a combination of the two products. Assume there are no other countries, and no other products, and that labour is the only factor of production. Canada has 100 workers available. Each worker can produce 4 units of wheat, or 2 units of cloth. Mexico has 1000 workers Each worker in Mexico can produce 1/5 unit of wheat or 1/5 unit of cloth. We can conclude that Canada (A) has a comparative advantage in cloth and an absolute advantage in wheat (B) has neither a comparative nor an absolute advantage (C) has a comparative advantage in wheat and an absolute advantage in cloth (but not in wheat) (D) has a comparative advantage in wheat and an absolute advantage in both cloth and wheat (E) has a comparative and absolute advantage in wheat (but not in cloth) (F) has a comparative and absolute advantage in cloth (G) has a comparative advantage in both cloth and wheat and an absolute advantage in both cloth and wheat (H) has an absolute advantage in both cloth and wheat, but no comparative advantage (I) has a comparative advantage in cloth and an absolute advantage in both cloth and wheat (J) has a comparative advantage in wheat and an absolute advantage in nothing Assume that there is a situation of autarchy between Canada and Mexico (international trade has not yet begun between these two countries). A person decides to borrow one unit of wheat in Canada, takes it to Mexico, and trades it for cloth in Mexico at the going rate (i.e., the prevailing rate of exchange along the Mexican PPF). Then this person takes the cloth received in Mexico, returns to Canada and trades the cloth for wheat at the going rate in Canada. What will the profit (or loss) of this trader be, once she has paid back the initial loan? (A) a loss of 4 units of wheat (B) a loss of 3 units of wheat (C) a loss of 2 units of wheat (D) a loss of 1 unit of wheat (E) a loss of 3/4 unit of wheat (F) the trader breaks even no profit, no loss (G) a profit of 3/4 unit of wheat (H) a profit of 1 unit of wheat (I) a profit of 2 units of wheat (J) a profit of 3 units of wheat

Explanation / Answer

14)

H)a profit of 1 unit of wheat

Price of cloth in Canada = 2* Price of wheat in Canada (because 4 units of wheat produced while only 2 units of cloth produced by same labor)

Price of cloth in Mexico= Price of wheat in Mexico (same amount of wheat and cloth produced by same labor)

From 1 unit of wheat, cloth units bought in Mexico = 1

From 1 unit of cloth , wheat units bought in Canada= 2

After returning the borrowed 1 unit of wheat in Canada, profit = 2-1 = 1 unit of wheat

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