Assume that both the United States and Germany produce beef and computer chips with the following costs:

a)What is the opportunity cost of beef (B)and computer chips (C)in each country?
b)In which commodity does the United States have a comparative cost advantage? What about Germany?
c)What is the range for mutually beneficial trade between the United States and Germany for each computer chip traded?
d)How much would the United States and Germany gain if 1 unit of beef is exchanged for 3 chips?

Question

Assume that both the United States and Germany produce beef and computer chips with the following costs:
  
a)What is the opportunity cost of beef (B)and computer chips (C)in each country?
b)In which commodity does the United States have a comparative cost advantage? What about Germany?
c)What is the range for mutually beneficial trade between the United States and Germany for each computer chip traded?
d)How much would the United States and Germany gain if 1 unit of beef is exchanged for 3 chips?

Quizplus · Accepted Answer

The Answer of Assume that both the United States and Germany produce beef and computer chips with the following costs:
  
a)What is the opportunity cost of beef (B)and computer chips (C)in each country?
b)In which commodity does the United States have a comparative cost advantage? What about Germany?
c)What is the range for mutually beneficial trade between the United States and Germany for each computer chip traded?
d)How much would the United States and Germany gain if 1 unit of beef is exchanged for 3 chips?

Assume That Both the United States and Germany Produce Beef