. Suppose the countries specialize. Which country will produce cars? D. Once they specialize, suppose they work out a trade of 2 million cars for 6 tons of paper. Find the new consumption point for each country and label it “X2.”
. Suppose the countries specialize. Which country will produce cars? D. Once they specialize, suppose they work out a trade of 2 million cars for 6 tons of paper. Find the new consumption point for each country and label it “X2.”
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains From Trade
Section: Chapter Questions
Problem 4PA
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2-6 ONLY ANSWER CD Suppose County A and B produce only paper and cars. Country A can produce 8 tons of paper or 4 million cars yearly. Country B can produce 25 tons of paper or 5 million cars yearly.
- Draw the
production possibilities frontier for each country.
2. Both countries want 2 million cars each year and as much paper as they can produce along with 2 million cars. Find this point on each production possibilities frontier and label it “X1.”
C. Suppose the countries specialize. Which country will produce cars?
D. Once they specialize, suppose they work out a trade of 2 million cars for 6 tons of paper. Find the new consumption point for each country and label it “X2.”
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