On two sets of axes, draw identical concave production frontiers with different community indifference curves tangent to them. Indicate the autarky equilibrium – relative commodity price in each nation. Show the process of specialisation in production and mutually beneficial trade.

On two sets of axes, draw identical concave production frontiers with different community indifference curves tangent to them. Indicate the autarky equilibrium – relative commodity price in each nation. Show the process of specialisation in production and mutually beneficial trade.

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter16: Creating An Environment For Growth And Prosperity

Section: Chapter Questions

Problem 6CQ

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On two sets of axes, draw identical concave production frontiers with different community indifference curves tangent to them.

Indicate the autarky equilibrium – relative commodity price in each nation.
Show the process of specialisation in production and mutually beneficial trade.

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