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Australia and South Korea can both produce food products and vehicles (both ships and cars).
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a. Which country has the absolute advantage in
Food production
Vehicle production
b. What is opportunity cost of producing 1 tonne of vehicles for both
Australia
South Korea
c. What is opportunity cost of producing 1 tonne of food for both
Australia
South Korea
d.Which country has the comparative advantage in
Food production
Vehicle production
e. Which country should specialise in
Food production
Vehicle production
f. What is the maximum Australia would pay (in terms of tonnes of food) for a tonne of vehicles
g. What is the minimum South Korea would accept (in terms of tonnes of food) for a tonne of vehicles
h. What does this suggest the terms of trade or price of vehicles (in terms of tonnes of food) will be
