In what product should each nation specialize

Reference no: EM131298742

Suppose that the marginal-cost ratios of two products-mangoes and sardines-are as follows in the hypothetical nations of Mangolia and Sardinia:

Mangolia: 1 mango = 2 cans of sardines

Sardinia: 1 mango = 4 cans of sardines

In what product should each nation specialize? Explain why the terms of trade of 1 mango = 3 cans of sardines would be acceptable to both nations.

Reference no: EM131298742

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