United StatesThe US can produce 40 planes or 4 cruise ships. France can produce 24 planes or 4 cruise ships.Planes/monthCruise ships/monthUnited StatesFrance4024Graph the PPFs for the US & France.Franceb.Who has the comparative advantage inthe production of planes? Explain your answer.C.d.4Who has the comparative advantage inthe production of cruise ships? Explain youranswer.Who has the absolute advantage inproducing planes?Who has the absolute advantage inproducing cruise ships?f., Propose terms of trade which wouldbe beneficial for both countries.

Answered: United States The US can produce 40…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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United States
The US can produce 40 planes or 4 cruise ships. France can produce 24 planes or 4 cruise ships.
Planes/month
Cruise ships/month
United States
France
40
24
Graph the PPFs for the US & France.
France
b.
Who has the comparative advantage in
the production of planes? Explain your answer.
C.
d.
4
Who has the comparative advantage in
the production of cruise ships? Explain your
answer.
Who has the absolute advantage in
producing planes?
Who has the absolute advantage in
producing cruise ships?
f.
, Propose terms of trade which would
be beneficial for both countries.

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Step 1: Define international trade

International trade is a branch of economics that deals with the exchange of goods, capital flows and export and import of goods or commodities. It represents the importance of the share of gross domestic product.

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