SUGAR (Millions of pounds)SUGAR (Millions of pounds)4. Specialization and tradeWhen 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 itstrading 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 Maldonia and Lamponia. Both countries produce grain and sugar, eachinitially (1.e., before specialization and trade) producing 24 million pounds of grain and 12 million pounds of sugar, as indicated by the grey starsmarked with the letter A.MaldoniaLamponia6464565648PPF484040323224PPF24161684856641624 324048566416243240GRAIN (Millions of pounds)GRAIN (Millions of pounds) SUGAR (Millions of pounds)Suppose that Maldonia and Lamponia agree to trade. Each country focuses its resources on producing only the good in which it has a comparativeadvantage. 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 oftrade between Maldonia and Lamponia.The following graph shows the same PPF for Maldonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on thegraph to indicate Maldonia's consumption after trade.Note: Dashed drop lines will automatically extend to both axes.Maldonia6456Consumption After Trade48PPF40322416015664

SUGAR (Millions of pounds) Suppose that Maldonia and 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. The following graph shows the same PPF for Maldonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on thes graph to indicate Maldonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. Maldonia 64 56 Consumption After Trade 48 PPF 40 32 24 16

SUGAR (Millions of pounds) Suppose that Maldonia and 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. The following graph shows the same PPF for Maldonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on thes graph to indicate Maldonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. Maldonia 64 56 Consumption After Trade 48 PPF 40 32 24 16

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In an international market, we say that a country will be an (Blank) of a good if it has the (Blank) advantage in producing that good Answer options exporter and comparative exporter and absolute importer and comparative importer and absolute
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Maldonia and lamponias consumption after trade on the graph!
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