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exercise2 consider an economy with two agents argentina and brazil...

Question: exercise2 consider an economy with two agents argentina and brazil...

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Exercise2 Consider an economy with two agents, Argentina and Brazil. The economy only produces two goods, coffee and sugar. Argentina and Brazil can produce the goods as follows: Coffee 4 hours/unit 6 hours/unit Sugar 2 hours/unit Argentina Brazil 4 hours/unit (a) Fill in the following table, computing the opportunity cost of production of each good for each country b) Who has the absolute advantage in the production of coffee? Why? c) Who has the comparative advantage in the production of coffee? Why? d) Consider the price of coffee in terms of sugar. What is the highest price at which coffee can be traded that would make both countries better off? What is the lowest price? Explain

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