International Trade Worksheet

International Trade Worksheet

ECO 365 WEEK 5 International Trade Worksheet

Complete the International Trade Worksheet.

Click the Assignment Files tab to submit your assignment.

Jack and Jill are stranded on an island.  In order to survive, they must use their labor skills to catch fish and pick fruit.  The charts below show the maximum amounts of fish and fruit each can produce per period, assuming no change in available resources or technology.

Jack                                         Jill

Fish                  Fruit                  Fish                  Fruit

80                      0                    30                      0

40                    20                    15                    30

0                    40                      0                    60

Does Jack have a comparative advantage in picking fruit or catching fish?  1) ____________

Does Jill have a comparative advantage in picking fruit or catching fish?    2) ____________

Assume in the absence of trade, Jack produces and consumes 40 fish and 20 fruit, while Jill produces and consumers 15 fish and 30 fruit.  Total production and consumption is then

55 fish and 50 fruit for Jack and Jill combined when there is no specialization or trade.

Next, assume Jack and Jill both specialize according to comparative advantage.  How much fish

and fruit will now be produced, in total?  3) ____________ fish and 4) ____________ fruit

According to this example what are the gains from trade in terms of world production of fish and fruit?

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