Question

Two countries produce coffee and blueberries. Nicaragua can produce either 25 thousand pounds of coffee or 100 thousand pounds of blueberries per year. Colombia can produce either 20 thousand pounds of coffee or 40 thousand pounds of blueberries per year.
Initially the two countries do not trade. Nicaragua produces 7 thousand pounds of coffee and 72 thousand pounds of blueberries. Colombia produces 7 thousand pounds of coffee and 26 thousand pounds of blueberries. Suppose the countries completely specialize and decide to trade 9 thousand pounds of coffee for 27 thousand pounds of blueberries.

Suppose the countries completely specialize and decide to trade 9 thousand pounds of coffee for 27 thousand pounds of blueberries. After trade, Nicaragua can consume _____________ thousand more pounds of coffee and ____________ thousand more pounds of blueberries. After trade, Colombia can consume_____________ thousand more pounds of coffee and thous and _______________more pounds of blueberries in comparison to the pre- trade consumption.

Answer 1

Answer:

Columbia has more than 4 coffee & 1 more berry.  

2) Nicaragua has more than 2 coffee & (100-27)= 73 berry, so 1 more berry.

Explanation:

                     Coffee  Berry

Columbia          20             40

Nicaragua          25              100

So Columbia has Comparative ADVANTAGE in Coffee,  

So it specializes in Coffee,   & Nicaragua specializes in Berry  

Initial consumption levels:  

In Columbia ( Coffee, Berry)= (7,26)  

In Nicaragua, (7,72)  

so if Columbia trades 9 Coffee for 27 Berry  

it can have (20-9) = 11 coffee, with 27 Berry  

1) Columbia has more than 4 coffee & 1 more berry.  

2) Nicaragua has more than 2 coffee & (100-27)= 73 berries, so 1 more berry.