Latvia and Estonia are two countries. Assume that currently there is no trade between them. Each country has 100 units of labor. Latvia produces fish, at a cost of 1 unit of labor per fish, and grain, at a cost of 2 units of labor per bushel. Estonia produces fish at a cost of 2 units of labor per fish, and grain at a cost of 3 units of labor per bushel. Both countries consume both fish and grain. a. True or False, the countries can both benefit if they can trade with each other

True

Explanation:

Opportunity costs for Latvia:

Opportunity cost of producing fish = 1/2 = 0.5 bushels of grain

Opportunity cost of producing grain = 2/1 = 2 fish

Opportunity costs for Estonia:

Opportunity cost of producing fish = 2/3 = 0.67 bushels of grain

Opportunity cost of producing grain = 3/2 = 1.5 fish

Latvia has a lower opportunity cost in the production of fish while Estonia has a lower opportunity cost in the production of grain. Competitive advantage refers to having a lower opportunity cost in the production of a good.

Both countries can therefore gain from trade if they traded in goods they have a competitive advantage in.

Latvia would gain if they traded fish for grain and Estonia would gain if they did the reverse.

they work in some type of way

since the options are not listed, when you are working on your budget you should also add water, tv, internet, miscellaneous and your 'fun' money for in your budget. when budgeting, you need to allow for fun money, and mis/accidental money so that you stick to the budget and not go crazy because you feel strapped to the budget.