Math Problem Statement

For the United States, the opportunity cost of a car is 0.4 cars per ton of grain.the opportunity cost of grain is 2.5 tons of grain per car. For Japan, the opportunity cost of a car is 2.5 tons of grain per car. Japan's opportunity cost is 0.4 cars per ton of grain. These opportunity costs can help determine the comparative advantage between the two countries.

how much would each give up to eachother in trade

Solution

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Math Problem Analysis

Mathematical Concepts

Comparative Advantage
Opportunity Cost
Trade Ratios

Formulas

Opportunity cost of a good = Quantity of another good given up / Quantity of the good produced
Trade range: Between opportunity costs of the goods traded

Theorems

Theory of Comparative Advantage

Suitable Grade Level

College level (Economics/International Trade)