The accompanying Production Possibilities Frontiers (PPF) represent hypothetical levels of production for Honduras and Brazil. Assume the two countries are initially producing and consuming in autarky at point A on each of their PPFS. Suppose these countries decide to trade. Each country will specialize in the production of the good for which it has a comparative advantage. b. Suppose each country specializes in the production of a. What will each country produce? the good for which it has a comparative advantage, and they trade at a price of of 4,000 tons of steel for 6,000 tons of bananas. Place the points labeled "Post Trade Consumption" to show the amounts of bananas and steel each country will have to consume after they trade. Honduras will produce both goods. Honduras will produce steel and Brazil bananas. Honduras will produce bananas and Brazil steel. Brazil will produce both goods. Honduras's PPF Brazil's PPF 10,000 10,000 9,000 9,000 8,000 8,000 Post Trade Consumption 7,000 7,000 .000 000 5,000 5.000 9.000 1,000 3,000 3,000 Post Trade Consumption 2,000 2,000 1,000 1,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons) 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons)
The accompanying Production Possibilities Frontiers (PPF) represent hypothetical levels of production for Honduras and Brazil. Assume the two countries are initially producing and consuming in autarky at point A on each of their PPFS. Suppose these countries decide to trade. Each country will specialize in the production of the good for which it has a comparative advantage. b. Suppose each country specializes in the production of a. What will each country produce? the good for which it has a comparative advantage, and they trade at a price of of 4,000 tons of steel for 6,000 tons of bananas. Place the points labeled "Post Trade Consumption" to show the amounts of bananas and steel each country will have to consume after they trade. Honduras will produce both goods. Honduras will produce steel and Brazil bananas. Honduras will produce bananas and Brazil steel. Brazil will produce both goods. Honduras's PPF Brazil's PPF 10,000 10,000 9,000 9,000 8,000 8,000 Post Trade Consumption 7,000 7,000 .000 000 5,000 5.000 9.000 1,000 3,000 3,000 Post Trade Consumption 2,000 2,000 1,000 1,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons) 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The accompanying Production Possibilities Frontiers (PPF) represent hypothetical levels of production for Honduras and
Brazil. Assume the two countries are initially producing and consuming in autarky at point A on each of their PPFS.
Suppose these countries decide to trade. Each country will specialize in the production of the good for which it has a
comparative advantage.
b. Suppose each country specializes in the production of
a. What will each country produce?
the good for which it has a comparative advantage, and
they trade at a price of of 4,000 tons of steel for 6,000 tons
of bananas. Place the points labeled "Post Trade
Consumption" to show the amounts of bananas and steel
each country will have to consume after they trade.
Honduras will produce both goods.
Honduras will produce steel and Brazil bananas.
Honduras will produce bananas and Brazil steel.
Brazil will produce both goods.
Transcribed Image Text:Honduras's PPF
Brazil's PPF
10,000
10,000
9,000
9,000
8,000
8,000
Post Trade Consumption
7,000
7,000
.000
000
5,000
5.000
9.000
1,000
3,000
3,000
Post Trade Consumption
2,000
2,000
1,000
1,000
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Steel (in tons)
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Steel (in tons)
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