00:01
So even though we're talking about money and the production of phones, we can kind of treat this like a comparative advantage, absolute advantage problem and draw the same kind of matrix.
00:09
So for south korea, they produce 50 million phones at $5 each.
00:13
So the price of 50 million phones would be five times 50 million.
00:19
For taiwan, they can produce 1 million phones at $10 each.
00:23
So the price would be $10 times $1 million, and the number of phones would be a million.
00:28
So in order to find out who has the comparative advantage and what the price they would be willing to trade at is, we have to find out who has the better opportunity cost.
00:37
So the opportunity cost for south korea would be equal to or would be that one phone is equal to $5.
00:45
An opportunity cost for taiwan is that one phone is equal to $10.
00:51
So in order for them to engage in trade, south korea, so the price of the phone has to be between two values...
