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Assume that before specialization and trade, Latalia produced combination B and Trombonia
produced combination C. Assume these two nations now specialize completely based on
comparative advantage.

Latalia's production
A. B. C. D. E.
pork 4 3 2 1 0
beans 0 5 10 15 20

Trombonia's production
A. B. C. D. E.
pork 8 6 4 2 0
beans 0 6 12 18 24


a. Prior to trade, what is the opportunity cost of Pork in terms of Beans in both Latalia and Trombonia?
b. What will each country specialize in?
c. Assuming complete specialization by comparative advantage, what will be the total gains from trade, in terms of increased pork and beans?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9491312

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