Author Question: Samoa could produce either 3 coconuts or 12 pineapples per worker, while Guam could produce either 5 ... (Read 105 times)

cool · **on:** Jun 30, 2018

Samoa could produce either 3 coconuts or 12 pineapples per worker, while Guam could produce either 5 coconuts or 20 pineapples per worker. In this situation:
a. if trade occurs, both countries will be able to consume beyond their original production possibilities frontiers.
b. Guam will be better off if it exports coconuts and imports pineapples.
c. both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples.
d. mutually beneficial trade cannot occur.

Question 2

Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. What is the opportunity cost of producing coffee in Chile?
a. Half a pound of sugar
b. Two-fifth of a pound of sugar
c. 2 pounds of sugar
d. One-third of a pound of sugar
e. 4 pounds of sugar