In Mali, one unit of clothing can be produced in 2 hours and one unit of food can be produced in 4 hours. In Brazil, one unit of clothing can be produced in 2 hours and one unit of food can be produced in 1 hour. Brazil approaches Mali and offers to trade 1 unit of food for 1 unit of clothing. Mali

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    will agree, because it currently costs Mali 2 units of clothing to produce 1 unit of food, and so when they trade 1 unit of clothing for 1 unit of food, their cost of food falls 50%.
     will not agree because it does not benefit them to trade with a larger country that is more efficient than Mali at producing most things.
     will agree because their total production and consumption will increase when they specialize in clothing production.
     all of the above.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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all of the above.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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