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Suppose that a worker in Argentina can make two saddles or 10 bridles per month, and a worker in Brazil can make three saddles or 20 bridles per month.
a. In what sense do saddles and bridles cost less in Brazil than in Argentina?
b. In what sense do saddles cost less in Argentina than in Brazil?
c. If Argentina and Brazil were to engage in trade, which country would export which good?
d. Would the answer to the above question change if a worker in Brazil could make four saddles per month?
Duopoly
A market structure in which two companies own all or nearly all of the market for a given product or service.
Price Effect
The impact on demand when the price of a product or service changes, influencing consumers' buying decisions.
Marginal Cost
The additional expense required to produce an extra item or unit of output, emphasizing its role in economic decision-making.
Fixed Cost
A cost that does not change with the amount of goods or services produced, such as rent, salaries, or loan payments.
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