Comparative Advantage
Given the following with each island having 100 workers producing fish and shirts weekly:
1. Which island has an absolute advantage in both products?
2. What is Crusoe Island giving up in order to produce one (1) unit of fish? (Do not give D.T.R. )
3. What is Yakamay Island giving up in order to produce one (1) unit of fish? (Do not give D.T.R.)
4. What are the parameters for the terms of trade if trade is going to be possible between these two islands?
5. What is Crusoe Island's gain or loss when she trades 600 Units of her comparative advantage if the terms of trade is 1 to 3? In the space provided in the table above, fill in the blanks but then repeat the answer below.
6. What is Yakamay Island/s gain or loss when using the same terms of trade from question No. 5. In the space provided in the table from the previous page, fill in the blanks but then repeat the answer below. CAUTION: Be sure to label appropriately.
7. Is trade possible? Why or why not?