42 42 36 36 PPF 30 30 24 24 18 PPF 18 12 12 5 -- -- 6. 0 6 12 18 24 30 36 42 48 6 12 18 24 30 36 42 48 LEMONS (Millions of pounds) LEMONS (Millions of pounds) Candonia has a comparative advantage in the production of , while Sylvania has a comparative advantage in the production of .Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of lemons and million pounds of coffee. Suppose that Candonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 12 million pounds of lemons for 12 million pounds of coffee. This ratio of goods is known as the price of trade between Candonia and Sylvania. COFFEE (Millions of pounds) COFFEE (Millions of pounds)

42 42 36 36 PPF 30 30 24 24 18 PPF 18 12 12 5 -- -- 6. 0 6 12 18 24 30 36 42 48 6 12 18 24 30 36 42 48 LEMONS (Millions of pounds) LEMONS (Millions of pounds) Candonia has a comparative advantage in the production of , while Sylvania has a comparative advantage in the production of .Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of lemons and million pounds of coffee. Suppose that Candonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 12 million pounds of lemons for 12 million pounds of coffee. This ratio of goods is known as the price of trade between Candonia and Sylvania. COFFEE (Millions of pounds) COFFEE (Millions of pounds)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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