(Answered) Compute the range of the international relative price

Economics

Problem: Use the following information from the table provided below to answer the questions below:

	Italy	Taiwan
Soft drinks produced per hour	2	16
Snowboards produced per hour	4	8

Required:

Question 1: Compute the range of the international relative price of soft drink cans at which the two countries would trade.

Question 2: Suppose that discovery of a new method of production (technological progress) in Italy doubles the marginal product of labor in snowboards. Would the two countries Italy and Taiwan continue to trade? Provide a brief explanation.

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Macroeconomics, Economics

Category:- Macroeconomics
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