5. Trading under increasing opportunity costs The following graph shows the production possibilities frontier for the imaginary country of Contente under conditions of increasing costs. In the absence of trade, the relative cost of wheat in Contente in terms of tablets (or the marginal rate of transformation (MRT) of wheat into tablets) is shown by the slope of line , tangent to the production possibilities frontier at point A. 250 WHEAT (Bushels) 200 28xs # 150 100 15 20 25 30 TABLETS 35 40 4. Consumption After Trade (?)
5. Trading under increasing opportunity costs The following graph shows the production possibilities frontier for the imaginary country of Contente under conditions of increasing costs. In the absence of trade, the relative cost of wheat in Contente in terms of tablets (or the marginal rate of transformation (MRT) of wheat into tablets) is shown by the slope of line , tangent to the production possibilities frontier at point A. 250 WHEAT (Bushels) 200 28xs # 150 100 15 20 25 30 TABLETS 35 40 4. Consumption After Trade (?)
Chapter17: International Trade
Section: Chapter Questions
Problem 1.3P
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