Question
Asked Jan 26, 2020
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Assume output was initially 100 wheat and 25 TV's in Country A and 40
wheat and 40 TV's in Country B. If both countries specialize according to
comparative advantage, their combined production of wheat changes from
140 to
and their combined
production of TV's changes from 65 to
based on the graphs below.
Wheat
Country A
Wheat
Country B
200
80
Television Sets
80
Television Sets
50
280; 130
200; 80
80; 50
200; 50
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Assume output was initially 100 wheat and 25 TV's in Country A and 40 wheat and 40 TV's in Country B. If both countries specialize according to comparative advantage, their combined production of wheat changes from 140 to and their combined production of TV's changes from 65 to based on the graphs below. Wheat Country A Wheat Country B 200 80 Television Sets 80 Television Sets 50 280; 130 200; 80 80; 50 200; 50

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Expert Answer

Step 1

The production frontier of the two countries are given in the figure in which the graph is steeper for the country A whereas the production frontier for country B is flatter. When the production frontier of a country is steeper, it means that the country has a comparative advantage in the production of the good which is indicated on the Y axis whereas the flatter production frontier indicates comparative advantage for the good on the X axis.

Step 2

As per the law, the country A will have comparative advantage in the production of the Wheat since it has a steeper production ...

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