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Assume production costs per day are 30 Brazilian Reals and 120 Mexican Pesos. [In other words,...

  1. Assume production costs per day are 30 Brazilian Reals and 120 Mexican Pesos. [In other words, it costs 30 Brazilian Reals to produce 6 cigars and 30 Brazilian Reals to produce 20 calculators and it takes 120 Mexican Pesos to produce 3 cigars and 120 Mexican Pesos to produce 10 calculators.]
  1. If the exchange rate is 10 pesos = 1 Real what is the direction of trade? Why?
  2. If the exchange rate is 15 pesos = 1 Real what is the direction of trade? Why?
  3. If the exchange rate is 5 pesos = 1 Real what is the direction of trade? Why?
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