Question 2.3

3. Using the numbers from Table 2-1, explain why the United States and Brazil are willing to engage in a trade of 10 large jets for 15 small jets.

At a trade of 10 U.S. large jets for 15 Brazilian small jets, Brazil gives up less for a large jet than it would if it were building large jets itself. Without trade, Brazil gives up 3 small jets for each large jet it produces. With trade, Brazil gives up only 1.5 small jets for each large jet from the United States. Likewise, the United States gives up less for a small jet than it would if it were producing small jets itself. Without trade, the United States gives up ¾ of a large jet for each small jet. With trade, the United States gives up only ⅔ of a large jet for each small jet from Brazil.