Exhibit 29-4 -Suppose the Post-Trade Relative Price Is 1/3 Radio Per Banana

question 17

Essay

Exhibit 29-4
-Suppose the post-trade relative price is 1/3 radio per banana, or equivalently 1 radio per 3 bananas. Based on the information in Exhibit 29-4, demonstrate the gains from trade to each country by assuming each takes 10 units of labor from the production of one good, moves the units of production to the other good, and trades the extra production with the other country.

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