Answer to Question #8565 in Microeconomics for rim

Question

mexico produces fish and coconuts and desire more fish.mexico signs agreement with canada bcuz the relative price of fish is lower in canada.
1.will the mexico economy produce more or less fish after agreement, will the mexico economy produce more or less coconuts after agreement.?
2. according to first answer, will this agreement help or hurt mexico fishers?will this agreement help or hurt mexico coconut producers?

Answer 1

1. Taking into consideration the effects of international trade and relative productivity of labor, Mexico would decrease its fish-production facilities in order to allocate human resources effectively. Namely, Mexican government would likely endeavor to employ excessive workforce from fishing industry in coconut production. Consequently, coconut industry will grow as a result of lower cost of production.
2. Having more job-seekers available in the national labor market, coconut producers would benefit from smaller price of labor. Surely, Mexican fishermen would have to go through requalification in order to obtain a workplace in coconut industry. Finally, we can conclude, that this agreement between Mexico and Canada will help coconut production in Mexico.