International Trade Worksheet ECO/372

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HOMEWORK Description

International Trade Worksheet ECO/372

Use the information in the graphs below to fill in the blanks.  Each graph represents the country’s production possibilities assuming full employment and efficient use of available resources.  Use the graphs to determine how much each country would be able to produce assuming it specializes according to its comparative advantage.

International Trade Worksheet ECO/372

Consumption       Production if there                  Units of                         Consumption

and production      is specialization                    output traded                in the free

if no trade or        according to                           Exports (-)                   trade

specialization       comparative advantage          Imports (+)                   equilibrium

Country A              100 wheat           ________ wheat                   – 80  wheat                ________ wheat

25  TVs              ________ TVs                      + 40 TVs                     ________ TVs

Country B              40  wheat            ________ wheat                   + 80 wheat                  ________ wheat

40 TVs               ________ TVs                      – 40 TVs                     ________ TVs

With no trade or specialization, total consumption is equal to 140 units of wheat and __________ TVs.

After specialization and free trade, total consumption is equal to 200 units of wheat and __________ TVs.

As a result of specialization and trade, world output of wheat rose by 60 units and world output of TVs

rose by __________ units.