Illustrate the rate of exchange of two products
Illustrate the rate of exchange of two products?
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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.
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Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below: Discover Q & A Leading Solution Library Avail More Than 1457078 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1935266 Asked 3,689 Active Tutors 1457078 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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