Freedonia has a comparative advantage in the production of (grain, tea, neither grain nor tea, both grain and tea), while Desonia has a comparative advantage in the production of (grain, tea, neither grain nor tea, both grain and tea). If each fully specializes that is, produces only the good for which each has a comparative advantage, the most the two countries can produce is (   )million pounds of grain and (   )million pounds of tea. The following graph shows the same PPF for Freedonia as before, as well as its initial consumption at point A. Use the green line (triangle symbol) to plot the trading possibilities line (TPL) for Freedonia. Then place the black point (plus symbol) on

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Freedonia has a comparative advantage in the production of (grain, tea, neither grain nor tea, both grain and tea), while Desonia has a comparative advantage in the production of (grain, tea, neither grain nor tea, both grain and tea). If each fully specializes that is, produces only the good for which each has a comparative advantage, the most the two countries can produce is (   )million pounds of grain and (   )million pounds of tea.

The following graph shows the same PPF for Freedonia as before, as well as its initial consumption at point A. Use the green line (triangle symbol) to plot the trading possibilities line (TPL) for Freedonia. Then place the black point (plus symbol) on the trading possibilities line to indicate Freedonia’s consumption after specialization and trade.

The following graph shows the same PPF for Desonia as before, as well as its initial consumption at point A.

The following graph shows the same PPF for Freedonia as before, as well as its Initial consumption at point A. Use the green Mne (triangie symbol) to
piot the trading possibilities line (TPL) for Freedonia. Then place the black point (plus symbol) on the trading possibliitles ine to indicate Freedonia's
consumption after specialization and trade.
Note: Dashed drop lines will automatically extend to both axes.
Freedonia
48
42
TPL
36
30
Consumption After Trade
24
18
PPF
12
6
12
18
24
30
36
42
48
GRAIN (Millions of pounds)
The following graph shows the same PPF for Desonla as before, as well as its initial consumption at point A.
TEA (Milions of pounds)
Transcribed Image Text:The following graph shows the same PPF for Freedonia as before, as well as its Initial consumption at point A. Use the green Mne (triangie symbol) to piot the trading possibilities line (TPL) for Freedonia. Then place the black point (plus symbol) on the trading possibliitles ine to indicate Freedonia's consumption after specialization and trade. Note: Dashed drop lines will automatically extend to both axes. Freedonia 48 42 TPL 36 30 Consumption After Trade 24 18 PPF 12 6 12 18 24 30 36 42 48 GRAIN (Millions of pounds) The following graph shows the same PPF for Desonla as before, as well as its initial consumption at point A. TEA (Milions of pounds)
When a country speciallizes in the production of a good, this means that it can produce this good at a lower opportunity cost than Its trading partner.
Because of this comparative advantage, both countries benefit when they specialize and trade with each other.
The following graphs show the production possibilitles frontiers (PPFS) for Freedonia and Desonia. Both countries produce graln and tea, each Initially
(that is, before specialization and trade) producing 18 milion pounds of grain and 9 million pounds of tea, as Indicated by grey polnts (star symbols)
labeled point A.
Freedonia
Desonia
48
48
42
42
36
36
PPF
30
30
24
24
18
PPF
18
12
12
6
12
18
24
30
36
42
48
6
12
18
24
30
36
42
48
GRAIN (MIlions of pounds)
GRAIN (Milions of pounds)
Freedonia has a comparative advantage in the production of
production of
while Desonia has a comparative advantage in the
If each fully speclalizes (that is, produces only the good for which each has a comparative advantage), the
million pounds of grain and
most the two countries can produce is
million pounds of tea.
Suppose that Freedonia and Desonia specialize and open up to Intemational trade, and the terms of trade in the world market are 1 pound of grain for
1 pound of tea. That is, Freedonla is willing to sell Desonia 1 pound of grain in exchange for 1 pound of tea, and Desonia is willing to sell Freedonla 1
pound of tea in exchange for 1 pound of grain. The countries decide to exchange 18 million pounds of grain for 18 million pounds of tea.
(spunod jo suo!w) Va1
(spunod jo suow) Va1
Transcribed Image Text:When a country speciallizes in the production of a good, this means that it can produce this good at a lower opportunity cost than Its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other. The following graphs show the production possibilitles frontiers (PPFS) for Freedonia and Desonia. Both countries produce graln and tea, each Initially (that is, before specialization and trade) producing 18 milion pounds of grain and 9 million pounds of tea, as Indicated by grey polnts (star symbols) labeled point A. Freedonia Desonia 48 48 42 42 36 36 PPF 30 30 24 24 18 PPF 18 12 12 6 12 18 24 30 36 42 48 6 12 18 24 30 36 42 48 GRAIN (MIlions of pounds) GRAIN (Milions of pounds) Freedonia has a comparative advantage in the production of production of while Desonia has a comparative advantage in the If each fully speclalizes (that is, produces only the good for which each has a comparative advantage), the million pounds of grain and most the two countries can produce is million pounds of tea. Suppose that Freedonia and Desonia specialize and open up to Intemational trade, and the terms of trade in the world market are 1 pound of grain for 1 pound of tea. That is, Freedonla is willing to sell Desonia 1 pound of grain in exchange for 1 pound of tea, and Desonia is willing to sell Freedonla 1 pound of tea in exchange for 1 pound of grain. The countries decide to exchange 18 million pounds of grain for 18 million pounds of tea. (spunod jo suo!w) Va1 (spunod jo suow) Va1
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