With 24 units of labor and no trade Brazil produces and consumes eight units of sugar cane and two iPods. Sugar cane costs $50/unit, and iPods cost $200. After specialization and trade, Brazil consumes 8 units of sugar cane and four iPods. What are wages in Brazil?
A) $33 without trade and $50 with trade
B) $50 without trade and $75 with trade
C) $50 without trade and $33 with trade
D) $33 without trade and $75 with trade

Question

Quizplus · Accepted Answer

Without trade, Brazil produces 8 sugar cane and 2 iPods, earning $400 + $400 = $800. With 24 units of labor, wages are $33.33. With trade, Brazil consumes 8 sugar cane and 4 iPods, earning $400 + $800 = $1200. With 24 units of labor, wages are $50.

With 24 Units of Labor and No Trade Brazil Produces