Will all of alphas shirt factories move to beta

Reference no: EM13205212

The following information shows labor productivity (output per day) in the countries of Alpha and Beta:

Alpha 3 computers 15 shirts
Beta 2 computers 6 shirts
Answer these questions:

(a) Which country has a comparative advantage in the production of computers? Explain carefully and give specific numbers as part of your explanation.
(b) If these two countries trade with each other, what should each country produce? Why?
(c) If the terms of trade are 1 computer = 4 shirts, will both countries gain from trade (compared to not trading at all)? Explain.
(d) Suppose that the countries use the same currency, and that the wage for shirt-makers is $150 per day in Alpha, versus only $80 in Beta. If the countries have free trade, will all of Alpha's shirt factories move to Beta?

Reference no: EM13205212

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