Answered: Draw the production possibility curve…

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter1: What Is Economics

Section: Chapter Questions

Problem 22AA

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Question

Draw the production possibility curve for each country using the data provided in the table.

b. Which country has an absolute advantage in what product? Which country has a comparative advantage in what product? Show your work!

c. Without trade, what is the price of food in terms of computers for both countries? Show
your work!

d. What is the range of prices (i.e., the CPC) at which trade can occur? Also, show (a) the possible CPC for each country and (b) the possible production and consumption possibility lines for both countries after trade. Show your work!

Computerland Production Possibilities
at Full Employment
Foodland Production Possibilities
at Full Employment
Food
(Billions of
Bushels)
Computers
(Millions)
Food
(Billions of
Bushels)
Computers
(Millions)
Point
Point
A
3
E
4.5
2
В
2
F
1
3
4
C
1
G
2
1.5
6
D
H
3

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