A worker in country A can produce either 5 computers or 45 tons of rice, while a worker in country B can produce either 7 computers or 42 tons of rice. a. Graph the production possibilities curve for each country. On which point of the curve would each country produce if the workers spent half of their time producing each good? b. Which country has absolute advantage? Which country has comparative advantage? In the production of rise Country A absolute advantage c. If there was trade, which country would specialize in the production of rice? d. At what price of computers would the countries agree to trade?

Brief Principles of Macroeconomics (MindTap Course List)
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ISBN:9781337091985
Author:N. Gregory Mankiw
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Chapter3: Interdependence And The Gains Rrom Trade
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A worker in country A can produce either 5 computers or 45 tons of rice, while a worker in country B can
produce either 7 computers or 42 tons of rice.


a. Graph the production possibilities curve for each country. On which point of the curve would each
country produce if the workers spent half of their time producing each good?


b. Which country has absolute advantage? Which country has comparative advantage? In the
production of rise Country A absolute advantage


c. If there was trade, which country would specialize in the production of rice?


d. At what price of computers would the countries agree to trade?

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