Suppose that Spain and France both produce ships and grapes, which are sold for the same price
in both countries. The table below shows the combinations of the two goods that each country can
produce in one year using the same amounts of capital and labor. Suppose that Spain is currently
producing 30 ships and 30 tons of grapes, and France is currently producing 30 ships and 30 tons
of grapes.
With specialization, Spain produces only grapes—75 tons—and France produces 75 ships. The
terms of trade are 1 ship for 1 ton of grapes, and 30 ships are traded for 30 tons of grapes.
Are the countries better off or worse off with trade? With specialization and trade, how many
additional ships (if any) can Spain consume?
Provide your answer as a number rounded to two decimal places. Use "-" to indicate negative
amounts. Do not include any symbols, such as "$", "=", "%", or "," in your answer.
Spain
France
Ships
Grapes (in tons)
Ships
Grapes (in tons)
0
75
0
50
10
60
15
40
20
45
30
30
30
30
45
20
40
15
60
10
50
0
75
0
