Two countries each produce two goods. Country 1 has 200 workers and Country 2 has 600
workers. If they do not trade, Country 1 produces 5 units of good 1 and 1 unit of good ECON
212 Microeconomics II Aya Tekin-Koru HOMEWORK 1 PAGE 2 2, and Country 2 produces 10
units of good 1 and 10 units of good 2. The following table shows how many workers are
necessary to produce each good: Country 1 Country 2 Workers per unit of good 1 20 20 Workers
per unit of good 2 100 40 a) In the absence of trade, how many units of goods 1 and 2 can
Country 2 produce? How many can Country 1 produce? b) Which country has a comparative
advantage in producing good 1? In producing good 2? c) Draw the production possibility for
each country and show where the two produce without trade. Put good 1 on vertical axis and
good 2 on horizontal axis. d) Draw the production possibility frontier with trade. e) Show that
both countries can benefit from trade..
Two countries each produce two goods. Country 1 has 200 workers and .pdf
1. Two countries each produce two goods. Country 1 has 200 workers and Country 2 has 600
workers. If they do not trade, Country 1 produces 5 units of good 1 and 1 unit of good ECON
212 Microeconomics II Aya Tekin-Koru HOMEWORK 1 PAGE 2 2, and Country 2 produces 10
units of good 1 and 10 units of good 2. The following table shows how many workers are
necessary to produce each good: Country 1 Country 2 Workers per unit of good 1 20 20 Workers
per unit of good 2 100 40 a) In the absence of trade, how many units of goods 1 and 2 can
Country 2 produce? How many can Country 1 produce? b) Which country has a comparative
advantage in producing good 1? In producing good 2? c) Draw the production possibility for
each country and show where the two produce without trade. Put good 1 on vertical axis and
good 2 on horizontal axis. d) Draw the production possibility frontier with trade. e) Show that
both countries can benefit from trade.
