Calculate the opportunity cost of producing each good

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Reference no: EM13994485

Using a certain quantity of resources, workers in the fictitious country of Iguania can produce 4 bottles of penicillin or 12 loaves of bread. Using the same resources, workers in another fictitious country, Chamelia, can produce 6 bottles of penicillin or 8 loaves of bread.

A. Calculate the opportunity cost of producing each good in each country.

B. Which country has comparative advantage in the production of which good?

C. Complaints about "unfair trade practices" lead to a mutual embargo between these two countries. Who will gain and who will suffer because of this embargo?

D. If, after a long embargo, trade is resumed between these two countries, who would benefit the most from it?

Reference no: EM13994485

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