The above tables represent the production possibilities frontiers (PPFs) for two different countries (Country 1 and Country 2) for two different goods (Good X and Good Y.) Points A, B, C, D, E, F represent various points along the PPF for Country 1. Points L, M, N, O, P represent various points along the PPF for Country 2.Assume that in each country the total number of hours worked is the same.Assume that before specialization Country 1 produces at point B and Country 2 produces at point M.Now, assume that each country completely specializes in the good in which it has comparative advantage and that 1000 units of Good Y are traded for 1000 units of Good X. Due to specialization and trade, Country 2 will be able to consume an extra ________ units of Good X and _______ units of Good Y compared to what it was able to consume when it was producing at point M. Country 1ProductionAPointBCDEFGood X500 400 300o 200 100Good Y300 600 900 1200 1500Country 2Production PointLMNGood X12,000 9000 6000 3000 0Good Y500 1000 1500 2000The above tables represent the production possibilities frontiers (PPFS) for two different countries(Country 1 and Country 2) for two different goods (Good X and Good Y.) Points A, B, C, D, E, Frepresent various points along the PPF for Country 1. Points L, M, N, O, P represent various pointsalong the PPF for Country 2.Assume that in each country the total number of hours worked is the same.Assume that before specialization Country 1 produces at point B and Country 2 produces at pointМ.Now, assume that each country completely specializes in the good in which it has comparativeadvantage and that 1000 units of Good Y are traded for 1000 units of Good X.Due to specialization and trade, Country 2 will be able to consume an extraunits of Good X andunits of Good Y compared to what it was able to consumewhen it was producing at point M.

Answered: Due to specialization and trade,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Concept explainers

Question

The above tables represent the production possibilities frontiers (PPFs) for two different countries (Country 1 and Country 2) for two different goods (Good X and Good Y.) Points A, B, C, D, E, F represent various points along the PPF for Country 1. Points L, M, N, O, P represent various points along the PPF for Country 2.

Assume that in each country the total number of hours worked is the same.

Assume that before specialization Country 1 produces at point B and Country 2 produces at point M.

Now, assume that each country completely specializes in the good in which it has comparative advantage and that 1000 units of Good Y are traded for 1000 units of Good X.

Due to specialization and trade, Country 2 will be able to consume an extra ________ units of Good X and _______ units of Good Y compared to what it was able to consume when it was producing at point M.

Country 1
Production
A
Point
BCDE
F
Good X
500 400 300o 200 100
Good Y
300 600 900 1200 1500
Country 2
Production Point
L
M
N
Good X
12,000 9000 6000 3000 0
Good Y
500 1000 1500 2000
The above tables represent the production possibilities frontiers (PPFS) for two different countries
(Country 1 and Country 2) for two different goods (Good X and Good Y.) Points A, B, C, D, E, F
represent various points along the PPF for Country 1. Points L, M, N, O, P represent various points
along the PPF for Country 2.
Assume that in each country the total number of hours worked is the same.
Assume that before specialization Country 1 produces at point B and Country 2 produces at point
М.
Now, assume that each country completely specializes in the good in which it has comparative
advantage and that 1000 units of Good Y are traded for 1000 units of Good X.
Due to specialization and trade, Country 2 will be able to consume an extra
units of Good X and
units of Good Y compared to what it was able to consume
when it was producing at point M.

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

Expert Solution

Step 1

Theory of Comparative advantage analyses the economy's ability of a country to produce a particular good or service at a lower opportunity cost than its trading partners.

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions