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Theory of comparative advantage

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Reference no: EM132224213

Use the following information to answer the next two questions

Country Rice (R) Production Wheat (W) Production

China 15 20

Mexico 10 25

Based on the theory of comparative advantage, Mexico should specialize in growing rice.

True

False

Which of the following terms of trade would result in the exchange of wheat and corn between Mexico and China?

R=1.67W

W=.8R

W=.3R

None of the above

Reference no: EM132224213

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