Compute the net benefit from trade for each country

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Benefits from Trade. In Country U, the opportunity cost of a computer is 10 pairs of shoes. In Country C, the opportunity cost of a computer is 100 pairs of shoes.

a. Suppose the two countries split the difference between the willingness to pay for computers and the willingness to accept computers. Compute the terms of trade, that is, the rate at which the two countries will exchange computers and shoes.

b. Suppose the two countries exchange one computer for the number of shoes dictated by the terms of trade you computed in part (a). Compute the net benefit from trade for each country.

Reference no: EM131130938

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