--%>
Assignment Help - homework help

Illustrate the rate of exchange of two products

Illustrate the rate of exchange of two products?

E

Expert

Verified

The rate of exchange of these two products will be determined through negotiation; the outcome is called the terms of trade.  The terms of trade will be limited by the relative costs of production within each country.  The U.S. will not forgo more than 1 ton of soybeans to get 3 tons of avocados and Mexico will not give up more than 4 tons of avocados for 1 ton of soybeans.  Somewhere between these limits, trade is possible.  In the text example, the terms of trade are assumed to be 3.5 tons of avocados for each ton of soybeans.  Americans would specialize in soybeans only if they could obtain more than 3 tons of avocados for 1 ton of soybeans by trading with Mexico.

   Related Questions in Business Economics

  • Q : Illustrate Scarcity and choice of

    Illustrate Scarcity and choice of Economic Perspective?

    		•
  • Q : Illustration of Absolute and Relative

    The price of KnickKnacks is $1 and the price of WigWags has increased with $2 to $3. Therefore:  (w) absolute price of KnickKnacks has decreased and the relative price of WigWags has increased. (x) relative and absolute prices of KnickKnacks have

    		•
  • Q : Who define Theory of Moral Sentiments

    The argument which slicing off one’s pinkie would be extra bothersome to which person than the loss of millions of his brethren was made within A Theory of Moral Sentiments (1755) through: (1) Adam Smith. (2) David Ricardo. (3) Theophrastus Phil

    		•
  • Q : Economic crisis situation in Europe

    Question: Describe the present economic crisis situation in Europe.   Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world i

    		•
  • Q : Higher opportunity costs of attendance

    Economics professors would attribute students’ higher rates of attendance on days while examinations are administered to the: (w) intensified needs to learn valuable material. (x) higher opportunity costs of missing set relative to other schedul

    		•
  • Q : Public policies for low-income Fuel

    Fuel stamp programs which subsidize heating oil purchases through low-income households encourage those families to: (w) create more income by working. (x) particularly conserve on their use of fuel. (y) live along with less purchasing power. (z) subs

    		•
  • Q : Internal factors which influencing the

    Write down the internal factors which influencing the capital structure?

    		•
  • Q : Utility with food coupons Question: In

    Question: In Vancouver the Salvation Army encourages people to make food voucher donations to panhandlers instead of simply giving them cash. You can buy a food voucher for $5 and give it to a panhandler who can use it to purchase food. The Sa

    		•
  • Q : Demand forecasting techniqes

    simultaneous method in demand forecasting?

    		•
  • Q : Describe four important areas to

    Describe four important areas to emphasize Expenditures?

    		•