tea Candonia has a comparative advantage in the production of while Sylvania has a comparative advantage in the production of Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of 24 million pounds of tea and 24 million pounds of potatoes 7 potatoes. Suppose that Candonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 4 million pounds of potatoes for 4 million pounds of tea. This ratio of goods is known as the price of trade between Candonia and Sylvania. The following graph shows the same PPF for Candonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Candonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes.
tea Candonia has a comparative advantage in the production of while Sylvania has a comparative advantage in the production of Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of 24 million pounds of tea and 24 million pounds of potatoes 7 potatoes. Suppose that Candonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 4 million pounds of potatoes for 4 million pounds of tea. This ratio of goods is known as the price of trade between Candonia and Sylvania. The following graph shows the same PPF for Candonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Candonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes.
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
Problem 1CQQ
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Transcribed Image Text:As you did for Candonia, place a black point (plus symbol) on the following graph to indicate Sylvania's consumption after trade.
Sylvania
32
Consumption After Trade
A
8
20
24
12 16
DOTATOES /Millions of nounde)
O
TEA (Millions of pounds)
28
24
20
16
12
8
4
0
0
PPF
4
28
32
G
Transcribed Image Text:tea
Candonia has a comparative advantage in the production of
while Sylvania has a comparative advantage in the
production of
potatoes ^
comparative advantage. After specialization, the two countries can produce a total of
potatoes.
. Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a
24 million pounds of tea and 24 million pounds of
Suppose that Candonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative
advantage. The countries decide to exchange 4 million pounds of potatoes for 4 million pounds of tea. This ratio of goods is known as the price of
trade between Candonia and Sylvania.
The following graph shows the same PPF for Candonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the
graph to indicate Candonia's consumption after trade.
Note: Dashed drop lines will automatically extend to both axes.
Candonia
O
C
D
32
€
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