Post trade consumption
If the U.S. post-trade consumption point lies along its production possibilities schedule, the United States achieves a higher level of welfare with trade than without trade. False If the international terms of trade lies beneath (inside) the Mexican cost ratio, Mexico is worse off with trade than without trade. In part 3 (the last one), we look at which country has the comparative advantage, and go through an example of trade the benefits both countries. We show that through specialization and trade Exchange and Consumption. In the last reading we derived Crusoe's production-possibilities frontier. Now, suppose that civilization arrives in the form of the Friday Trading Post. The trading post trades one fish for one coconut (or one coconut for one fish).