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Business, 17.06.2021 15:40 shainaanderson24
The Dominican Republic and Nicaragua both produce coffee and rum. The Dominican Republic can produce 16,000 tons of coffee per year or 4,000 barrels of rum. Nicaragua can produce 10,000 tons of coffee per year or 2,000 barrels of rum.
a. Suppose the Dominican Republic and Nicaragua sign a trade agreement in which each country would specialize in the production of either coffee or rum. Which country should specialize in producing coffee? Which country should specialize in producing rum?
b. What are the minimum and maximum prices at which these countries will trade coffee?
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