The production possibility curve in the absence of trade.

Question

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Answer 1

Question

Chapter 20, Problem 1P

(a)

To determine

The production possibility curve in the absence of trade.

(a)

Expert Solution

Explanation of Solution

Figure-1 shows the PPC curve for the country G in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 1

In Figure-1, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Figure-2 shows the PPC curve for the country F in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 2

In Figure-2, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Economics Concept Introduction

Production possibility curve: PPC represents the maximum output combinations of the two commodities that can produce at the given inputs in the economy.

(b)

To determine

Identify the role of transportation costs in trade.

(b)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter. Therefore, the opportunity cost of butter is ½ gun. In the case of country F, the value of opportunity cost of a gun is 1.5 pounds of butter. Therefore, the opportunity cost of butter is 2/3 gun. Thus, country F has a comparative advantage in the production of guns and country G has a comparative advantage in the production of butter.

Economics Concept Introduction

Comparative advantage: The comparative advantage theory states that specialization in a particular commodity based on the opportunity cost and free trading will benefit the trading partners.

(c)

To determine

Identify the role of the trade agreement in the exchange process.

(c)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter and in country F, the opportunity cost of gun is 1.5 pounds of butter. Therefore, the trade will be beneficial to both the countries if they agree to exchange 1.75 pounds of butter per gun.

Economics Concept Introduction

Trade agreement: The trade agreement is an agreement introduced by the trading partners about the rates of tariff, taxes, guarantees, and trade treaty

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Answer 2

Question

Chapter 20, Problem 1P

(a)

To determine

The production possibility curve in the absence of trade.

(a)

Expert Solution

Explanation of Solution

Figure-1 shows the PPC curve for the country G in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 1

In Figure-1, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Figure-2 shows the PPC curve for the country F in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 2

In Figure-2, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Economics Concept Introduction

Production possibility curve: PPC represents the maximum output combinations of the two commodities that can produce at the given inputs in the economy.

(b)

To determine

Identify the role of transportation costs in trade.

(b)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter. Therefore, the opportunity cost of butter is ½ gun. In the case of country F, the value of opportunity cost of a gun is 1.5 pounds of butter. Therefore, the opportunity cost of butter is 2/3 gun. Thus, country F has a comparative advantage in the production of guns and country G has a comparative advantage in the production of butter.

Economics Concept Introduction

Comparative advantage: The comparative advantage theory states that specialization in a particular commodity based on the opportunity cost and free trading will benefit the trading partners.

(c)

To determine

Identify the role of the trade agreement in the exchange process.

(c)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter and in country F, the opportunity cost of gun is 1.5 pounds of butter. Therefore, the trade will be beneficial to both the countries if they agree to exchange 1.75 pounds of butter per gun.

Economics Concept Introduction

Trade agreement: The trade agreement is an agreement introduced by the trading partners about the rates of tariff, taxes, guarantees, and trade treaty

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 20, Problem 1P

(a)

To determine

The production possibility curve in the absence of trade.

(a)

Expert Solution

Explanation of Solution

Figure-1 shows the PPC curve for the country G in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 1

In Figure-1, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Figure-2 shows the PPC curve for the country F in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 2

In Figure-2, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Economics Concept Introduction

Production possibility curve: PPC represents the maximum output combinations of the two commodities that can produce at the given inputs in the economy.

(b)

To determine

Identify the role of transportation costs in trade.

(b)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter. Therefore, the opportunity cost of butter is ½ gun. In the case of country F, the value of opportunity cost of a gun is 1.5 pounds of butter. Therefore, the opportunity cost of butter is 2/3 gun. Thus, country F has a comparative advantage in the production of guns and country G has a comparative advantage in the production of butter.

Economics Concept Introduction

Comparative advantage: The comparative advantage theory states that specialization in a particular commodity based on the opportunity cost and free trading will benefit the trading partners.

(c)

To determine

Identify the role of the trade agreement in the exchange process.

(c)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter and in country F, the opportunity cost of gun is 1.5 pounds of butter. Therefore, the trade will be beneficial to both the countries if they agree to exchange 1.75 pounds of butter per gun.

Economics Concept Introduction

Trade agreement: The trade agreement is an agreement introduced by the trading partners about the rates of tariff, taxes, guarantees, and trade treaty

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 20, Problem 1P

(a)

To determine

The production possibility curve in the absence of trade.

(a)

Expert Solution

Explanation of Solution

Figure-1 shows the PPC curve for the country G in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 1

In Figure-1, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Figure-2 shows the PPC curve for the country F in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 2

In Figure-2, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Economics Concept Introduction

Production possibility curve: PPC represents the maximum output combinations of the two commodities that can produce at the given inputs in the economy.

(b)

To determine

Identify the role of transportation costs in trade.

(b)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter. Therefore, the opportunity cost of butter is ½ gun. In the case of country F, the value of opportunity cost of a gun is 1.5 pounds of butter. Therefore, the opportunity cost of butter is 2/3 gun. Thus, country F has a comparative advantage in the production of guns and country G has a comparative advantage in the production of butter.

Economics Concept Introduction

Comparative advantage: The comparative advantage theory states that specialization in a particular commodity based on the opportunity cost and free trading will benefit the trading partners.

(c)

To determine

Identify the role of the trade agreement in the exchange process.

(c)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter and in country F, the opportunity cost of gun is 1.5 pounds of butter. Therefore, the trade will be beneficial to both the countries if they agree to exchange 1.75 pounds of butter per gun.

Economics Concept Introduction

Trade agreement: The trade agreement is an agreement introduced by the trading partners about the rates of tariff, taxes, guarantees, and trade treaty

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 20, Problem 1P

(a)

To determine

The production possibility curve in the absence of trade.

(a)

Expert Solution

Explanation of Solution

Figure-1 shows the PPC curve for the country G in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 1

In Figure-1, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Figure-2 shows the PPC curve for the country F in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 2

In Figure-2, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Economics Concept Introduction

Production possibility curve: PPC represents the maximum output combinations of the two commodities that can produce at the given inputs in the economy.

(b)

To determine

Identify the role of transportation costs in trade.

(b)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter. Therefore, the opportunity cost of butter is ½ gun. In the case of country F, the value of opportunity cost of a gun is 1.5 pounds of butter. Therefore, the opportunity cost of butter is 2/3 gun. Thus, country F has a comparative advantage in the production of guns and country G has a comparative advantage in the production of butter.

Economics Concept Introduction

Comparative advantage: The comparative advantage theory states that specialization in a particular commodity based on the opportunity cost and free trading will benefit the trading partners.

(c)

To determine

Identify the role of the trade agreement in the exchange process.

(c)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter and in country F, the opportunity cost of gun is 1.5 pounds of butter. Therefore, the trade will be beneficial to both the countries if they agree to exchange 1.75 pounds of butter per gun.

Economics Concept Introduction

Trade agreement: The trade agreement is an agreement introduced by the trading partners about the rates of tariff, taxes, guarantees, and trade treaty

Answer 6

Chapter 20, Problem 1P

(a)

To determine

The production possibility curve in the absence of trade.

(a)

Expert Solution

Explanation of Solution

Figure-1 shows the PPC curve for the country G in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 1

In Figure-1, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Figure-2 shows the PPC curve for the country F in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 2

In Figure-2, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Economics Concept Introduction

Production possibility curve: PPC represents the maximum output combinations of the two commodities that can produce at the given inputs in the economy.

Answer 7

Chapter 20, Problem 1P

(a)

To determine

The production possibility curve in the absence of trade.

Answer 8

(a)

Expert Solution

Explanation of Solution

Figure-1 shows the PPC curve for the country G in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 1

In Figure-1, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Figure-2 shows the PPC curve for the country F in the absence of trade.

Principles of Microeconomics, Chapter 20, Problem 1P , additional homework tip 2

In Figure-2, the y-axis shows the quantity of guns and the x-axis shows the quantity of butter. The given line shows the PPC of these two products in the absence of trade.

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Production possibility curve: PPC represents the maximum output combinations of the two commodities that can produce at the given inputs in the economy.

Answer 13

(b)

To determine

Identify the role of transportation costs in trade.

(b)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter. Therefore, the opportunity cost of butter is ½ gun. In the case of country F, the value of opportunity cost of a gun is 1.5 pounds of butter. Therefore, the opportunity cost of butter is 2/3 gun. Thus, country F has a comparative advantage in the production of guns and country G has a comparative advantage in the production of butter.

Economics Concept Introduction

Comparative advantage: The comparative advantage theory states that specialization in a particular commodity based on the opportunity cost and free trading will benefit the trading partners.

Answer 14

(b)

To determine

Identify the role of transportation costs in trade.

Answer 15

(b)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter. Therefore, the opportunity cost of butter is ½ gun. In the case of country F, the value of opportunity cost of a gun is 1.5 pounds of butter. Therefore, the opportunity cost of butter is 2/3 gun. Thus, country F has a comparative advantage in the production of guns and country G has a comparative advantage in the production of butter.

Answer 16

(b)

Expert Solution

Answer 17

(b)

Expert Solution

Answer 18

Expert Solution

Answer 19

Economics Concept Introduction

Comparative advantage: The comparative advantage theory states that specialization in a particular commodity based on the opportunity cost and free trading will benefit the trading partners.

Answer 20

(c)

To determine

Identify the role of the trade agreement in the exchange process.

(c)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter and in country F, the opportunity cost of gun is 1.5 pounds of butter. Therefore, the trade will be beneficial to both the countries if they agree to exchange 1.75 pounds of butter per gun.

Economics Concept Introduction

Trade agreement: The trade agreement is an agreement introduced by the trading partners about the rates of tariff, taxes, guarantees, and trade treaty

Answer 21

(c)

To determine

Identify the role of the trade agreement in the exchange process.

Answer 22

(c)

Expert Solution

Explanation of Solution

In country G, the value of opportunity cost of a gun is 2 pounds of butter and in country F, the opportunity cost of gun is 1.5 pounds of butter. Therefore, the trade will be beneficial to both the countries if they agree to exchange 1.75 pounds of butter per gun.

Answer 23

(c)

Expert Solution

Answer 24

(c)

Expert Solution

Answer 25

Expert Solution

Answer 26

Economics Concept Introduction

Trade agreement: The trade agreement is an agreement introduced by the trading partners about the rates of tariff, taxes, guarantees, and trade treaty