Hi, An average worker in Brazil can produce an ounce of soybeans in 20minutes an

Question

Hi,

An average worker in Brazil can produce an ounce of soybeans in 20minutes and an ounce of coffee in 60 minutes, while an averageworker in Per can produce an ounce of soybeans in 50 minutes and anounce of coffee in 75 minutes.

a) Who has the absolute advantage in coffee and explain.
b) Who has the comparative advantage in coffee, and explain.
c) If the two countries specialize and trade with each other, whowill import coffee, and explain.
d) Assume that the two countries trade and that the countryimporting coffee trades 2 ounces of soybeans for 1 ounce of coffee,explain why both countries will benefit from this trade.

Thank you,

Nettie

Explanation / Answer

Making 1 oz of Brazil gives up Peru gives up Coffee 2.5 oz soybean 1.5 oz soybeans Soybeans .4 oz coffee .66 oz coffee
Brazil because it has the lowest time to produce anounce b)Who has the comparative advantage in coffee, andexplain. Peru because it cost the least in term up giving up soybeanproduction c)If the two countries specialize and trade with each other, who willimport coffee, and explain. Brazil would import coffee because it "cost" the most to makeit would be better to produce soybeans and trade for coffee (seebelow) d)Assume that the two countries trade and that the country importingcoffee trades 2 ounces of soybeans for 1 ounce of coffee, explainwhy both countries will benefit from this trade IfBrazil were to make 2 oz of soybeans it would take 40 minutes +Peru 1oz of coffee 75 minutes = 115 minutes total but if Brazil made its own coffee and Peru its ownsoybeans Brazil 1oz of coffee 60 minute + Peru 2oz of soybeans 100minutes = 160 minutes total soits a 45 minute time savings (time=money)
Making 1 oz of Brazil gives up Peru gives up Coffee 2.5 oz soybean 1.5 oz soybeans Soybeans .4 oz coffee .66 oz coffee

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.