QUESTION 11Suppose the world economy is composed of just two countries: A and B. Each can produce steel or chemicals but at different levelsof economic efficiency. The domestic production possibilities curves are shown in the graphs below.SteelChemicalsCountry A0 0 0 0StedChemicalsCountry B60Refer to the above graphs and information. It can be seen that:country B has a comparative advantage in chemicals.countryB can produce more of both goods than A.country A has a comparative advantage in both commodities.it is more costly in terms of resources to produce steel in country A.

OC(opportunity cost ) is the cost of next best option. For example - A person can do job A of $20000…

QUESTION 11 Suppose the world economy is composed of just two countries: A and B. Each can produce steel or chemicals but at different levels of economic efficiency. The domestic production possibilities curves are shown in the graphs below. Steel Chemicals Country A Stea Chemicals Country B Refer to the above graphs and information. It can be seen that: country B has a comparative advantage in chemicals. country B can produce more of both goods than A. country A has a comparative advantage in both commodities. it is more costly in terms of resources to produce steel in country A.

QUESTION 11 Suppose the world economy is composed of just two countries: A and B. Each can produce steel or chemicals but at different levels of economic efficiency. The domestic production possibilities curves are shown in the graphs below. Steel Chemicals Country A Stea Chemicals Country B Refer to the above graphs and information. It can be seen that: country B has a comparative advantage in chemicals. country B can produce more of both goods than A. country A has a comparative advantage in both commodities. it is more costly in terms of resources to produce steel in country A.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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56 56 48 48 PPF 40 40 32 32 24 PPF 24 16 16 -- -- -- - 8 16 24 32 40 48 56 64 16 24 32 40 48 56 84 GRAIN (Millions of pounds) GRAIN (Millions of pounds) Maldonia has a comparative advantage in the production of while Lamponia has a comparative advantage in the production of Suppose that Maldonia and Lamponia 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 sugar and million pounds of grain. Suppose that Maldonia ánd Lamponia 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 24 million pounds of grain for 24 million pounds of sugar. This ratio of goods is known as the price of trade between Maldonia and Lamponia. W SUGAR (MIlons of pounds) SUGAR (MIlions of pounds)
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