Reference no: EM1321585

1. An average worker in Brazil can produce an ounce of soybeans in 20minutes and an ounce of coffee in 60 minutes, while an average worker in Per can produce an ounce of soybeans in 50 minutes and announce of coffee in 75 minutes.

a) Who has the absolute advantage in coffee and explain.

b) Who has the comparative advantage in coffee, and explain.

c) If the two countries specialize and trade with each other, who will import coffee, and explain.

d) Assume that the two countries trade and that the country importing coffee trades 2 ounces of soybeans for 1 ounce of coffee, explain why both countries will benefit from this trade.

2. College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start their careers, their consumption of these goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:

A. inferior goods.

B. normal goods.

C. complementary goods.

D. substitute goods.