4. If each of these two countries decides to specialize and trade, which of the following trades is both feasible and enables both countries to attain burrito-computer bundles not available to them without trade?
- Country 1 offers 20 burritos to Country 2 for 15 computers.
In Country 1, 15 computers costs 45 burritos, so this is a good deal for Country 1. In Country 2, 20 burritos costs 20 computer so it's good for Country 2 as well. And both countries can produce the required output, so this is certainly a correct answer.
- Country 2 offers 30 burritos to Country 1 for 20 computers. In Country 2, 20 computers costs only 20 burritos so Country 2 would not offer 30 burritos for something they can produce for 20. In Country 1, 20 computers cost 60 burritos so Country 1 would not trade them for 30 burritos.
- Country 1 offers 30 computers to Country 2 for 25 burritos. In Country 1, 30 computers costs them 90 burritos, so they would not offer a trade accepting less than this from Country 2.
However, if they did, Country 2 would surely accept it, since 30 computers typically costs them 30 burritos.
- Country 2 offers 75 burritos to Country 1 for 75 computers. Country 1 simply cannot produce 75 computers no matter what so this trade is not feasible.
- Country 1 offers 125 burritos to Country 2 for 125 computers. It would cost 375 burritos (if it had that capability, which it doesn't) for Country 1 to produce 125 computers so this would be a great deal for Country 1. Though, Country 1 can only produce 100 computers so this is not feasible.
|
| Country 1 |
Country 2 |
| Burr. | Comp. | Burr. | Comp. |
| 150 | 0 | 100 | 0 |
| 120 | 10 | 80 | 20 |
| 90 | 20 | 60 | 40 |
| 60 | 30 | 40 | 60 |
| 30 | 40 | 20 | 80 |
| 0 | 50 | 0 | 100 |
|
