Answered: Two products: X and Y Two nations in…

Two products: X and Y Two nations in the world: nation 1 and nation 2 International price: P=1Y/X Which industry expands in nation 2 after opening to trade? Ox Y None Both

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100
80
60
40
20
11
C
X
E
None
Both
111
-P=0.21/X
B
120
100
80
60
40
20
X
0 10 30 50 70 90 110 130 150
Pa=1/x
0
T
1
1
Two products: X and Y
Two nations in the world: nation 1 and nation 2
International price: P=1Y/X
Which industry expands in nation 2 after opening to trade?
20
2
40
60
80
th
Pg=1Y/X
\p=3Y/x
100 120 X

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Step 1: Define Production Possibility Frontier

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Step 2: Find the expanding industry in Nation 2.

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