The following graph shows the same PPF for Yosemite as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Yosemite's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. PISTACHIOS (Millions of pounds) 80 70 60 50 40 30 20 10 0 0 PPF 10 20 Yosemite 30 40 50 PEAS (Millions of pounds) 60 70 80 Consumption After Trade (?) The following graph shows the same PPF for Congaree as before, as well as its initial consumption at point A.

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Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
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Problem 7SQ
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The following graph shows the same PPF for Yosemite as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the
graph to indicate Yosemite's consumption after trade.
Note: Dashed drop lines will automatically extend to both axes.
PISTACHIOS (Millions of pounds)
80
70
60
50
40
30
20
10
0
0
PPF
10
20
Yosemite
A
30
40
50
PEAS (Millions of pounds)
60
70
80
Consumption After Trade
?
The following graph shows the same PPF for Congaree as before, as well as its initial consumption at point A.
Transcribed Image Text:The following graph shows the same PPF for Yosemite as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Yosemite's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. PISTACHIOS (Millions of pounds) 80 70 60 50 40 30 20 10 0 0 PPF 10 20 Yosemite A 30 40 50 PEAS (Millions of pounds) 60 70 80 Consumption After Trade ? The following graph shows the same PPF for Congaree as before, as well as its initial consumption at point A.
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 Yosemite and Congaree. Both countries produce peas and pistachios, each
initially (i.e., before specialization and trade) producing 30 million pounds of peas and 15 million pounds of pistachios, as indicated by the grey stars
marked with the letter A.
PISTACHIOS (Millions of pounds)
80
70
60
50
40
30
20
10
0
PPF
0 10
Yosemite
20 30 40 50 60
PEAS (Millions of pounds)
70
80
(?)
PISTACHIOS (Millions of pounds)
80
70
60
50
40
30
20
10
0
PPF
0 10
Congaree
30, 15
1
A
20 30 40 50 60
PEAS (Millions of pounds)
70 80
?
Yosemite has a comparative advantage in the production of
while Congaree has a comparative advantage in the
production of
. Suppose that Yosemite 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 pistachios and
million pounds
of peas.
Suppose that Yosemite 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 20 million pounds of peas for 20 million pounds of pistachios. This ratio of goods is known as the price
of trade between Yosemite and Congaree.
Transcribed Image Text: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 Yosemite and Congaree. Both countries produce peas and pistachios, each initially (i.e., before specialization and trade) producing 30 million pounds of peas and 15 million pounds of pistachios, as indicated by the grey stars marked with the letter A. PISTACHIOS (Millions of pounds) 80 70 60 50 40 30 20 10 0 PPF 0 10 Yosemite 20 30 40 50 60 PEAS (Millions of pounds) 70 80 (?) PISTACHIOS (Millions of pounds) 80 70 60 50 40 30 20 10 0 PPF 0 10 Congaree 30, 15 1 A 20 30 40 50 60 PEAS (Millions of pounds) 70 80 ? Yosemite has a comparative advantage in the production of while Congaree has a comparative advantage in the production of . Suppose that Yosemite 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 pistachios and million pounds of peas. Suppose that Yosemite 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 20 million pounds of peas for 20 million pounds of pistachios. This ratio of goods is known as the price of trade between Yosemite and Congaree.
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