what is the most of each good that Canadians can consume when the economy is open?

Question

Two Canadians workers, Sam and Joe, can each produce tv or coffee. Sam can produce either 50 kg of coffee or 1 tv per month. and Joe can produce either 120 kg of coffee or 1 tv per month. 

f) assuming that world prices are such that tv trades for 135 kg of coffee on international markets.



g) what is the most of each good that Canadians can consume when the economy is open?

TV = ?      Coffee= ?

Answer 1

They have comparative advantage in TV's. They can produce 2 T's and TYrade for 270 kg of Coffee.

This defines their terms of Trade or Consumption opportunity set when they completely specialize in TV's