SUGAR (Millions of pounds)4842SUGAR (Millions of pounds)36302418 PPF1260484236 PPF30241801280The following graph shows the same PPF for Lamponia as before, as well as its initial consumption at point A.As you did for Maldonia, use the green line (triangle symbol) to plot the trading possibilities line (TPL) for Lamponia. Then place the black point (plussymbol) on the trading possibilities line to indicate Lamponia's consumption after specialization and trade.(?)06TrueO False12182430LEMONS (Millions of pounds)6Maldonia1236Lamponia4218 24 30LEMONS (Millions of pounds)364842TPL++48Consumption After Trade(?)TPLConsumption After TradeTrue or False: Without engaging in international trade, Maldonia and Lamponia would have been able to consume at the after-trade consumptionbundles. (Hint: Base your answer to this question on the answers you previously entered on this page.) 4. Specialization and tradeWhen a country specializes 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 possibilities frontiers (PPFS) for Maldonia and Lamponia. Both countries produce lemons and sugar, eachinitially (that is, before specialization and trade) producing 18 million pounds of lemons and 9 million pounds of sugar, as indicated by grey points (starsymbols) labeled point A.SUGAR (Millions of pounds)484238302418 PPF1280081Maldonia12 18 24 30 36LEMONS (Millions of pounds)42 48?Maldonia has a comparative advantage in the production ofproduction ofadvantage), the most the two countries can produce isSUGAR (Millions of pounds)48423630241812600PPF6LamponiaA12 18 24 30 36 42 48LEMONS (Millions of pounds)?, while Lamponia has a comparative advantage in the▼. If each fully specializes (that is, produces only the good for which each has a comparativemillion pounds of lemons andmillion pounds of sugar.Suppose that Maldonia and Lamponia specialize and open up to international trade, and the terms of trade in the world market are 1 pound of lemonsfor 1 pound of sugar. That is, Maldonia is willing to sell Lamponia 1 pound of lemons in exchange for 1 pound of sugar, and Lamponia is willing to sellMaldonia 1 pound of sugar in exchange for 1 pound of lemons. The countries decide to exchange 12 million pounds of lemons for 12 million pounds ofsugar.The following graph shows the same PPF for Maldonia as before, as well as its initial consumption at point A. Use the green line (triangle symbol) toplot the trading possibilities line (TPL) for Maldonia. Then place the black point (plus symbol) on the trading possibilities line to indicate Maldonia'sconsumption after specialization and trade.

A country has a comparative advantage in producing that good if the opportunity cost of producing…

SUGAR (Millions of pounds) 48 42 SUGAR (Millions of pounds) 36 30 24 18 PPF 12 6 0 48 $ 42 36 PPF 30 24 18 0 12 8 The following graph shows the same PPF for Lamponia as before, as well as its initial consumption at point A. 0 As you did for Maldonia, use the green line (triangle symbol) to plot the trading possibilities line (TPL) for Lamponia. Then place the black point (plus symbol) on the trading possibilities line to indicate Lamponia's consumption after specialization and trade. (?) 6 0 O True 12 18 24 30 LEMONS (Millions of pounds) 6 Maldonia 12 36 Lamponia 42 18 24 30 LEMONS (Millions of pounds) 36 48 42 TPL ++ 48 Consumption After Trade (?) TPL Consumption After Trade True or False: Without engaging in international trade, Maldonia and Lamponia would have been able to consume at the after-trade consumption bundles. (Hint: Base your answer to this question on the answers you previously entered on this page.)

SUGAR (Millions of pounds) 48 42 SUGAR (Millions of pounds) 36 30 24 18 PPF 12 6 0 48 $ 42 36 PPF 30 24 18 0 12 8 The following graph shows the same PPF for Lamponia as before, as well as its initial consumption at point A. 0 As you did for Maldonia, use the green line (triangle symbol) to plot the trading possibilities line (TPL) for Lamponia. Then place the black point (plus symbol) on the trading possibilities line to indicate Lamponia's consumption after specialization and trade. (?) 6 0 O True 12 18 24 30 LEMONS (Millions of pounds) 6 Maldonia 12 36 Lamponia 42 18 24 30 LEMONS (Millions of pounds) 36 48 42 TPL ++ 48 Consumption After Trade (?) TPL Consumption After Trade True or False: Without engaging in international trade, Maldonia and Lamponia would have been able to consume at the after-trade consumption bundles. (Hint: Base your answer to this question on the answers you previously entered on this page.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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