@M ? 67% .+)- Mon 1 View History Bookmarks People Window Help Recitation Quiz Ke

Question

@M ? 67% .+)- Mon 1 View History Bookmarks People Window Help Recitation Quiz Key-Google x e Econ 2001 Shareable Mater" Requirements l Department- a as m ECON 200 × https://drive.google.com/drive/folders/085jOfOC2ojivzU1GVWTIRGxnNXc U 10U 3. The following diagrams show the production possibilities for Honduras and the Dominican Republic producing bananas and coffee. Which of the following statements is true? a) Honduras has the absolute advantage in both bananas and coffee b) Honduras has the comparative advantage in coffee lic has the aheat advant: Dominican anas and coffee he Do Honduras u ha Docan nepuulic Coffee has the Coffee ive adt Republic nas 300 200 800 Bananas 1000 Bananas 4. Based on the above diagrams, which of the following would be an appropriate terms of trade? a) 1 banana trades for 0.5 coffee b) 1 coffee trades for 3.5 bananas c) 1 banana trades for 0.2 coffee d) 1 coffee trades for 2.7 bananas 20 808 FS

Explanation / Answer

3) A. Honduras has absolute advantage in both goods as both banana and coffee cab be produced more

4). Opp cost of banana in honduras=300/1000=0.3coffee

Opp cost of banana in domician=200/800=0.25coffee

Thus 1coffee trades with 3.5 banana or 1 banana trades with 0.2875 coffee

Ans is B

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