Specialization and trade When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Shenandoah and Congaree. Both countries produce peas and lentils, each initially (i.e., before specialization and trade) producing 36 million pounds of peas and 18 million pounds of lentils, as indicated by the grey stars marked with the letter A. Shenandoah has a comparative advantage in the production of PEAS or LENTILS or NEITHER PEAS OR LENTILS or BOTH PEAS AND LENTILS. while Congaree has a comparative advantage in the production of PEAS or LENTILS or NEITHER PEAS OR LENTILS or BOTH PEAS AND LENTILS. Suppose that Shenandoah and Congaree 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 peas and ???? million pounds of lentils. Suppose that Shenandoah and Congaree 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 peas for 24 million pounds of lentils. This ratio of goods is known as the price of trade between Shenandoah and Congaree. The following graph shows the same PPF for Shenandoah as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Shenandoah's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. The following graph shows the same PPF for Congaree as before, as well as its initial consumption at point A. As you did for Shenandoah, place a black point (plus symbol) on the following graph to indicate Congaree's consumption after trade.

Specialization and trade When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Shenandoah and Congaree. Both countries produce peas and lentils, each initially (i.e., before specialization and trade) producing 36 million pounds of peas and 18 million pounds of lentils, as indicated by the grey stars marked with the letter A. Shenandoah has a comparative advantage in the production of PEAS or LENTILS or NEITHER PEAS OR LENTILS or BOTH PEAS AND LENTILS. while Congaree has a comparative advantage in the production of PEAS or LENTILS or NEITHER PEAS OR LENTILS or BOTH PEAS AND LENTILS. Suppose that Shenandoah and Congaree 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 peas and ???? million pounds of lentils. Suppose that Shenandoah and Congaree 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 peas for 24 million pounds of lentils. This ratio of goods is known as the price of trade between Shenandoah and Congaree. The following graph shows the same PPF for Shenandoah as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Shenandoah's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. The following graph shows the same PPF for Congaree as before, as well as its initial consumption at point A. As you did for Shenandoah, place a black point (plus symbol) on the following graph to indicate Congaree's consumption after trade.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Specialization and trade

When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods.

The following graphs show the production possibilities frontiers (PPFs) for Shenandoah and Congaree. Both countries produce peas and lentils, each initially (i.e., before specialization and trade) producing 36 million pounds of peas and 18 million pounds of lentils, as indicated by the grey stars marked with the letter A.

Shenandoah has a comparative advantage in the production of PEAS or LENTILS or NEITHER PEAS OR LENTILS or BOTH PEAS AND LENTILS.

while Congaree has a comparative advantage in the production of PEAS or LENTILS or NEITHER PEAS OR LENTILS or BOTH PEAS AND LENTILS.

Suppose that Shenandoah and Congaree 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 peas and ???? million pounds of lentils.

Suppose that Shenandoah and Congaree 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 peas for 24 million pounds of lentils. This ratio of goods is known as the price of trade between Shenandoah and Congaree.

The following graph shows the same PPF for Shenandoah as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Shenandoah's consumption after trade.

Note: Dashed drop lines will automatically extend to both axes.

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

As you did for Shenandoah, place a black point (plus symbol) on the following graph to indicate Congaree's consumption after trade.

LENTILS (Millions of pounds)
96
84
72
8
60
48
36 PPF
24
12
0
0
I
12
1
Shenandoah
24 38 48 60 72
PEAS (Millions of pounds)
2
84 96
?
LENTILS (Millions of pounds)
96
84
72
60
48
36
24
12
0
0
PPF
12
Congaree
24
36 48 60 72
PEAS (Millions of pounds)
84
96
?

The following graph shows the same PPF for Shenandoah as before, as well as its initial consumption at point A. Place a black point (plus symbol) on
the graph to indicate Shenandoah's consumption after trade.
Note: Dashed drop lines will automatically extend to both axes.
LENTILS (Millions of pounds)
96
84
72
60
48
36
24
12
0
0
PPF
12
24
Shenandoah
A
36
48
60
PEAS (Millions of pounds)
72
84
96
Consumption After Trade
(?)

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