Scenario 20.2 Suppose Labor Productivity Differences Are the Only Determinants of Comparative

question 107

Multiple Choice

Scenario 20.2
Suppose labor productivity differences are the only determinants of comparative advantage, and both Egypt and Ghana produce only corn and cocoa. In Egypt, 10 bushels of corn or 15 pounds of cocoa can be produced in a day. In Ghana, one day of labor can be used to produce either 2 bushels of corn or 8 pounds of cocoa.
-Refer to Scenario 20.2. Egypt will be willing to trade corn for cocoa if in the international market 1 bushel of corn can be exchanged for:

• A)more than 1 pound but less than 2.5 pounds of cocoa.
• B)less than 1 pound of cocoa.
• C)more than 1.5 pounds but less than 4 pounds of cocoa.
• D)less than two-third of a pound of cocoa.
• E)more than half a pound but less than 1.25 pounds of cocoa.

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