Candonia has a comparative advantage in the production of tea , while Sylvania has a comparative advantage in the production of potatoes . Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a 24 million pounds of tea and 24 million pounds of comparative advantage. After specialization, the two countries can produce a total of potatoes. 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 4 million pounds of potatoes for 4 million pounds of tea. This ratio of goods is known as the price of trade between Candonia and Sylvania. The following graph shows the same PPF for Candonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Candonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes.

Candonia has a comparative advantage in the production of tea , while Sylvania has a comparative advantage in the production of potatoes . Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a 24 million pounds of tea and 24 million pounds of comparative advantage. After specialization, the two countries can produce a total of potatoes. 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 4 million pounds of potatoes for 4 million pounds of tea. This ratio of goods is known as the price of trade between Candonia and Sylvania. The following graph shows the same PPF for Candonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Candonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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