Suppose That the Productivity Per Worker in the Milk and Cranberry

question 165

Essay

Suppose that the productivity per worker in the milk and cranberry juice industries of Southland and Northland are as follows: $\begin{array}{c}\underline{\text { Output in Thousands of Litres }}\\\begin{array}{lll}\\\\\text {Northland}\\\text {Southland} \end{array}\begin{array}{c}\\\underline{\text { Milk }} \\6\\2\end{array}\begin{array}{lll}\\\\\text { or }\\\text { or } \end{array}\begin{array}{c}\\\underline{\text { Cranberry Juice}}\\3\\1\end{array}\end{array}$

a) Which country has the absolute advantage in producing milk?
b) Which country has the absolute advantage in producing cranberry juice?
c) Which country has the comparative advantage in producing milk?
d) Which country has the comparative advantage in producing cranberry juice?
e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?

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Definitions:

Collateral

Goods or property used to secure a debt.

Right to Redeem

The legal right to reclaim property or an asset that has been sold, under certain conditions, within a specified period.

Security Agreement

A contract that grants a lender a security interest in a specified asset or property, serving as collateral for a loan.

Personal Property Registry

The Personal Property Registry is a legal database where security interests in personal property (items other than real estate) are registered, facilitating the public notice of claims.