Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. Calculate the opportunity cost of producing sugar in Brazil

Intraindustry trade tends to be more controversial than interindustry trade

Indicate whether the statement is true or false

A small change in the rate of productivity growth will have: a. a small impact on output in both the short run and the long run

b. a large impact on output in both the short run and the long run. c. a small impact on output in the short run but a large impact in the long run. d. a large impact on output in the short run but a small impact in the long run. e. no effect on output at all.