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Question - The following table shows the bushels of corn and kgs of beef that Mainland and Wishland can produce per day when they use all their resources efficiently.
Corn
Beef
Mainland
240
120
Wishland
400
320
(a) Identify the commodity in which Mainland and Wishland have absolute advantage in. Identify the commodity in which Mainland and Wishland have comparative advantage in.
(b) Indicate whether or not trade is possible and the basis for trade if possible. What is the range for the terms of trade for mutually beneficial trade if possible?
i. Would it be good for Mainland to exchange 20 bushels of corn for 20 kgs of beef with Wishland and would Wishland agree?
ii. Would it be good for Mainland to exchange 60 bushels of corn for 42 kgs of beef with Wishland and would Wishland agree?
iii. Would it be good for Mainland to exchange 80 bushels of corn for 36 kgs of beef with Wishland and would Wishland agree?
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