Two countries, Northland and Southland each produce only two goods-corn and coffee beans. If Northland spends all its resources making corn it can make 800 bushels of corn, or if it spends all its resources making coffee, it can make 200 bushels of coffee beans. If Southland spends all its resources making corn it can make 600 bushels of corn, or if it spends all its resources making cars, it can make 300 bushels of coffee beans Note: The information above gives you the endpoints for each country's production possibilities frontier. Assume, for simplicity, that marginal opportunity costs are constant in each country. a) If the countries specialize according to comparative advantage and trade, which country should produce coffee beans? Explain clearly how you determine this. b) If countries specialize as described in (a), how many bushels of corn should trade for one bushel of coffee beans in order to make both countries better off? Explain clearly both why trade on these terms makes the producer/exporter of the beans better off and why it makes the buyer/importer of the beans better off.

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