>Country A can grow 750 tons of corn or 500 tons of wheat. Country B can >grow 2

Question

>Country A can grow 750 tons of corn or 500 tons of wheat. Country B can
>grow 200 tons of corn or 400 tons of wheat. Each country specializes
>entirely in the good for which it has a comparative advantage.
>
>Assume no transaction costs, that one unit of corn will trade for one
>unit of wheat, and that Countries A and B derive the same utility from
>all levels of corn and wheat.
>
>Which bundle of goods might Country B consume if both countries engage
>in trade?
>
>Select one.
>
>   
> A. 100 tons of corn and 100 tons of wheat
> B. 100 tons of corn and 400 tons of wheat
> C. 200 tons of corn and 200 tons of wheat
> D. 300 tons of corn and 300 tons of wheat
> E. 400 tons of corn and 400 tons of wheat
I don't know the correct answer or even where to start inorder to solve. Please help!! If you know how to do this - pleasegive me steps to solve. Thanks in advance!! >Country A can grow 750 tons of corn or 500 tons of wheat. Country B can
>grow 200 tons of corn or 400 tons of wheat. Each country specializes
>entirely in the good for which it has a comparative advantage.
>
>Assume no transaction costs, that one unit of corn will trade for one
>unit of wheat, and that Countries A and B derive the same utility from
>all levels of corn and wheat.
>
>Which bundle of goods might Country B consume if both countries engage
>in trade?
>
>Select one.
>
>   
> A. 100 tons of corn and 100 tons of wheat
> B. 100 tons of corn and 400 tons of wheat
> C. 200 tons of corn and 200 tons of wheat
> D. 300 tons of corn and 300 tons of wheat
> E. 400 tons of corn and 400 tons of wheat
I don't know the correct answer or even where to start inorder to solve. Please help!! If you know how to do this - pleasegive me steps to solve. Thanks in advance!!

Explanation / Answer

Country A: 750 corn or 500 wheat Country B: 200 corn or 400 wheat Country A has a competitive advantage in producing corn, becauseCountry B has to give up much more wheat in order to producecorn. Therefore, Country A should produce all corn and Country B shouldproduce all wheat. Totally there is 750 tons of corn and 400 tons of wheat. Withtrade, Country B can obtain 200 tons of corn and 200 tons of wheat.C.

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