When a country has a comparative advantage in the production of a god, t means that it can produce this good at a lomer 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 Maldonia and Desania. Both countries produce lemons and tea, each intialy (i.e, befare spedialization and trade) producing 24 million pounds of lemons and 12 milion pounds of tea, as indicated by the grey stars marked with the letter A. Maldonia Desonia 40 24 PPF 16 34 2 4 16 34 2 41 s LEMONS (Mona of pounda) LEMONS (Miliona of pounda) Maldonia has a comparative advantage in the production of . while Desonia has a comparative advantape in the ▼ . Suppose that Maidonia and Desonia specialize in the production of the goods in which each has a comparative advantage. Alter specialization, the two countries can produce a total of 45 milion pounds of tea and48 milion pounds of tea production of lemons lemons. Suppose that Maldonia and Desonia agres to trade. Each country focuses its resources oen producing only the good in which it has a comparative advantage. The countries decide to exchange 24 milion pounds of lemans for 24 million pounds of tea. This ratio of goods is known as the price of trade between Maidoania and Desonia The folowing graph shows the same PPF for Maldania as before, as wal as its initial consumption at point A. Place a black point (alus symbol) on the graph to indicate Maldonia's consumptian after trade. Note: Dashed drop lines will automaticaly extand to both ases. 3 8 A A .. (spunod auo Va (spured oEMVL
When a country has a comparative advantage in the production of a god, t means that it can produce this good at a lomer 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 Maldonia and Desania. Both countries produce lemons and tea, each intialy (i.e, befare spedialization and trade) producing 24 million pounds of lemons and 12 milion pounds of tea, as indicated by the grey stars marked with the letter A. Maldonia Desonia 40 24 PPF 16 34 2 4 16 34 2 41 s LEMONS (Mona of pounda) LEMONS (Miliona of pounda) Maldonia has a comparative advantage in the production of . while Desonia has a comparative advantape in the ▼ . Suppose that Maidonia and Desonia specialize in the production of the goods in which each has a comparative advantage. Alter specialization, the two countries can produce a total of 45 milion pounds of tea and48 milion pounds of tea production of lemons lemons. Suppose that Maldonia and Desonia agres to trade. Each country focuses its resources oen producing only the good in which it has a comparative advantage. The countries decide to exchange 24 milion pounds of lemans for 24 million pounds of tea. This ratio of goods is known as the price of trade between Maidoania and Desonia The folowing graph shows the same PPF for Maldania as before, as wal as its initial consumption at point A. Place a black point (alus symbol) on the graph to indicate Maldonia's consumptian after trade. Note: Dashed drop lines will automaticaly extand to both ases. 3 8 A A .. (spunod auo Va (spured oEMVL
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Note: Dashed drop lines will automatically extend to both axes.
Maldonia
Cansumpion Atar Trade
40
16
24
64
LEMONS (Mona af pounta)
The following graph shows the same POF for Desonia as before, as well as its initial consumption at point A.
As you did for Maidonia, piace a black point (plus symba) on the fallowing graph to indicate Desona's consumption after trade.
Desonia
64
Consumpion Atar Trade
12
24
PPF
16
16
24
40
LEMONS (Mona of pourda
True or False: Without engaging in international trade, Maidonia and Desonia would not have been able to consume at the after-trade consumption
bundles. (Hint: Base this question an the answers you previously entered on this page.)
True
O False
(spurod Va
Transcribed Image Text:When a country has a comparative advantage in the production of a god, t means that it can produce this good at a lomer 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 Maldonia and Desania. Both countries produce lemons and tea, each intialy
(i.e, befare spedialization and trade) producing 24 million pounds of lemons and 12 milion pounds of tea, as indicated by the grey stars marked with
the letter A.
Maldonia
Desonia
40
24
PPF
2 41 s
LEMONS (Miliona of pounda)
16 34 2
4
16
34
LEMONS (Mona of pounda)
Maldonia has a comparative advantage in the production of
. while Desonia has a comparative advantape in the
▼ . Suppose that Maidonia and Desonia specialize in the production of the goods in which each has a
comparative advantage. Alter specialization, the two countries can produce a total of 45 milion pounds of tea and48 milion pounds of
tea
production of
lemons
lemons.
Suppose that Maldonia and Desonia agres to trade. Each country focuses its resources oen producing only the good in which it has a comparative
advantage. The countries decide to exchange 24 milion pounds of lemans for 24 million pounds of tea. This ratio of goods is known as the price of
trade between Maidoania and Desonia
The folowing graph shows the same PPF for Maldania as before, as wal as its initial consumption at point A. Place a black point (alus symbol) on the
graph to indicate Maldonia's consumptian after trade.
Note: Dashed drop lines will automaticaly extand to both ases.
3 8 A 3 .
(spunod auo Va
(spured oEMVL
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