Nation A 100 50
Nation B 50 10
a. According to Adam Smith, would mutually beneficial trade be possible? Defend your answer.
b. According to David Ricardo, would mutually beneficial trade be possible? Defend your answer.
c. If you answered yes to b., what is the range of mutually beneficial international prices?
d. If you answered yes to b., choose a mutually beneficial international price from c., and indicate numerically (compare the international price to the closed economy price) how each nation gains.
e. Given your answers in b,c and d., depict the gains from trade graphically. Be sure to label all intercepts on your graphs. (you can hand draw these graphs or use a paint program).
2. Real World Micro, article 1.3. Critically summarize and analyze.
3. Real World Micro, article 8.4. Critically summarize and analyze.
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