Scenario 20.2
Suppose labor productivity differences are the only determinants of comparative advantage, and both Egypt and produce only corn and cocoa. In Egypt, 10 bushels of corn or 15 pounds of cocoa can be produced in a day. In Ghana, one day of labor can be used to produce either 2 bushels of corn or 8 pounds of cocoa.
-Refer to Scenario 20.2. Egypt will be willing to trade corn for cocoa if in the international market 1 bushel of corn can be exchanged for:

Question

Quizplus · Accepted Answer

Egypt has a comparative advantage in corn, as it can produce more corn per day than Ghana. Egypt will trade corn for cocoa if it can get more cocoa than it would produce itself by reallocating resources. Egypt can produce 1.5 pounds of cocoa for every bushel of corn, so it will trade if it can get more than 1.5 pounds of cocoa per bushel of corn.

Scenario 20.2 Suppose Labor Productivity Differences Are the Only Determinants of Comparative