2019 - I

UNIVERSIDAD DEL NORTE

BUSINESS SCHOOL
MARKETING AND INTERNATIONAL BUSINESS DEPARTMENT
INTERNATIONAL ECONOMIC INTEGRATION

INTERNATIONAL TRADE THEORY EXERCISES

ABSOLUTE ADVANTAGE

1. Using the following information complete questions a to f:

450 R Planes Boats

Spain 20 R per unit 40 R per unit
Turkey 35 R per unit 30 R per unit

a. Which country has the absolute advantage on which product?

b. Draw the production possibility frontier (PPF).
c. Calculate the production/consumption in autarchy.
d. Define the amount of product countries could trade and calculate the new level of
consumption.
e. Include in the PPF drawing the points of autarchy and after trade consumption.
f. Calculate the earnings after trade.

2. Using the following information answer the same questions of the previous exercise.

700 R Mobile Phones Batteries

Mongolia 90 R per unit 30 R per unit
El Congo 15 R per unit 70 R per unit

Lorena A. Palacios-Chacon, PhD