In: Economics
3. The table below shows units of commodity X and Y that the U.S. and Mexico can produce with one- hour of labor time. Output Per Hour of Labor Commodity U.S. Mexico X (in units) 5 20 Y (in units) 30 5
a. Identify the commodity in which the U.S. and Mexico have a comparative advantage.
Output Per Hour of Labor |
||
Commodity |
U.S. |
Mexico |
X (in units) |
5 |
20 |
Y (in units) |
30 |
5 |
b. Suppose that the U.S. exchanges 15Y for 45X with Mexico. What is the TOT for commodity Y? How much would the U.S. and Mexico gain?