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Assume a Ricardian (Comparative Advantage) place. Also assume that Southland requires 8 hours for laptop computers...

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Economics

Assume a Ricardian (Comparative Advantage) place. Also assumethat Southland requires 8 hours for laptop computers and 2 hoursfor desktop computers, while the rest of the world (RoW) needs 4hours for laptops or 2 hours for desktops. Each country has 1000labor hrs. available. Additionally, assume these countries decideto open for trade and they specialize in products that they havecomparative advantage.

What is ToT (terms of trade) for one desktop computer?

A) 0.25 < ToT < 0.5 (< signs are greater than or equalto, not < in A, B and C)

B) 2 < ToT < 4

C) 4 < ToT < 2

D) All of the above

Answer & Explanation Solved by verified expert
3.8 Ratings (698 Votes)
Terms of trade ToTThis the number of goods one country must give up to obtain    See Answer
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