Which country has a comparative advantage in which good?

The table below describes the number of cars and TVs a worker can produce (MPL) in the US and Mexic Show more The table below describes the number of cars and TVs a worker can produce (MPL) in the US and Mexico. The US and Mexico both have 40 workers. Cars Televisions U.S 3 2 Mexico 2 3 In the space below draw the Production Possibility Frontier for both countries. (1 point) US Mexico Cars Cars What is the relative price of cars in the US? What is the relative price of cars in Mexico? (1 point) Which country has a comparative advantage in which good?(1 point) Suppose that without trade the US consumes 90 cars and 20 TVs. Mexico consumes 90 TVs and 20 cars. Draw the indifference curves and show the equilibrium on the graph above. (2 points) Suppose that the two countries trade with each other and the world price of cars relative to televisions is 1. Draw and label the consumption possibility frontier for each country on the graph above. (1 point) Calculate the wages for workers in terms of TVs in each country if the relative world price of cars is 1 TV. Show your work. (2 points) Do both countries gain from trade? How do you know? (2 points) Show less

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