According to the above set of production possibilities and consumption (trade) possibilities frontiers, what will happen to production and relative prices once trade is opened between these two countries? a) Production of cloth in Portugal will fall to zero, while the price of wine will fall to ½ yd/bottle. b) Production of cloth in England will fall to zero, while the price of wine will increase to ½ yd/bottle. c) Production of wine in Portugal will increase to 90, while the price of cloth will fall to 2 yd/bottle. d) Production of wine in England will increase to 60, while the price of cloth will fall to 3 bottles/yd. wine908888807060504030201000 10 20 30 40 50 60clothnPortugalPPFCPFwineEngland90807060504030 ➡201000 10 20 30 40 50 60cloth→PPFCPF

PPF stands for Production Possibility Frontier, which is a graphical representation showing the…

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ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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According to the above set of production possibilities and consumption (trade) possibilities frontiers, what will happen to production and relative prices once trade is opened between these two countries?

		a) Production of cloth in Portugal will fall to zero, while the price of wine will fall to ½ yd/bottle.
		b) Production of cloth in England will fall to zero, while the price of wine will increase to ½ yd/bottle.
		c) Production of wine in Portugal will increase to 90, while the price of cloth will fall to 2 yd/bottle.
		d) Production of wine in England will increase to 60, while the price of cloth will fall to 3 bottles/yd.

wine
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cloth
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Portugal
PPF
CPF
wine
England
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cloth
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CPF

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