Answered: Table: Production Possibilities for the…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter2: Economic Tools And Economic Systems

Section: Chapter Questions

Problem 3.7P

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Question

Table: Production Possibilities for the United States and Canada

U.S. Production Possibilities	One Possibility	Another Possibility
Quantity of Cars (Millions)	10	0
Quantity of Lumber (millions of board feet)	0	10
Canada Production Possibilities	One Possibility	Another Possibility
Quantity of Cars (Millions)	2	0
Quantity of Lumber (millions of board feet)	0	12

Reference: Ref 8-3 Table: Production Possibilities for the United States and Canada

(Table: Production Possibilities for the United States and Canada) Use Table: Production Possibilities for the United States and Canada. Both nations can produce cars and lumber. If these nations trade, Canada has the comparative advantage in _____ and should trade _____ to the United States in exchange for _____.

Question 13 options:

	lumber; lumber; cars
	cars; cars; lumber.
	lumber; cars; lumber
	cars; lumber; cars

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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