The accompanying Production Possibilities Frontiers (PPF) represent hypothetical levels of production for Honduras andBrazil. Assume the two countries are initially producing and consuming in autarky at point A on each of their PPFS.Suppose these countries decide to trade. Each country will specialize in the production of the good for which it has acomparative advantage.b. Suppose each country specializes in the production ofa. What will each country produce?the good for which it has a comparative advantage, andthey trade at a price of of 4,000 tons of steel for 6,000 tonsof bananas. Place the points labeled "Post TradeConsumption" to show the amounts of bananas and steeleach country will have to consume after they trade.Honduras will produce both goods.Honduras will produce steel and Brazil bananas.Honduras will produce bananas and Brazil steel.Brazil will produce both goods. Honduras's PPFBrazil's PPF10,00010,0009,0009,0008,0008,000Post Trade Consumption7,0007,000.0000005,0005.0009.0001,0003,0003,000Post Trade Consumption2,0002,0001,0001,0001,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000Steel (in tons)1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000Steel (in tons)

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Asked Dec 13, 2019
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The accompanying Production Possibilities Frontiers (PPF) represent hypothetical levels of production for Honduras and
Brazil. Assume the two countries are initially producing and consuming in autarky at point A on each of their PPFS.
Suppose these countries decide to trade. Each country will specialize in the production of the good for which it has a
comparative advantage.
b. Suppose each country specializes in the production of
a. What will each country produce?
the good for which it has a comparative advantage, and
they trade at a price of of 4,000 tons of steel for 6,000 tons
of bananas. Place the points labeled "Post Trade
Consumption" to show the amounts of bananas and steel
each country will have to consume after they trade.
Honduras will produce both goods.
Honduras will produce steel and Brazil bananas.
Honduras will produce bananas and Brazil steel.
Brazil will produce both goods.
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The accompanying Production Possibilities Frontiers (PPF) represent hypothetical levels of production for Honduras and Brazil. Assume the two countries are initially producing and consuming in autarky at point A on each of their PPFS. Suppose these countries decide to trade. Each country will specialize in the production of the good for which it has a comparative advantage. b. Suppose each country specializes in the production of a. What will each country produce? the good for which it has a comparative advantage, and they trade at a price of of 4,000 tons of steel for 6,000 tons of bananas. Place the points labeled "Post Trade Consumption" to show the amounts of bananas and steel each country will have to consume after they trade. Honduras will produce both goods. Honduras will produce steel and Brazil bananas. Honduras will produce bananas and Brazil steel. Brazil will produce both goods.

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Honduras's PPF
Brazil's PPF
10,000
10,000
9,000
9,000
8,000
8,000
Post Trade Consumption
7,000
7,000
.000
000
5,000
5.000
9.000
1,000
3,000
3,000
Post Trade Consumption
2,000
2,000
1,000
1,000
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Steel (in tons)
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
Steel (in tons)
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Honduras's PPF Brazil's PPF 10,000 10,000 9,000 9,000 8,000 8,000 Post Trade Consumption 7,000 7,000 .000 000 5,000 5.000 9.000 1,000 3,000 3,000 Post Trade Consumption 2,000 2,000 1,000 1,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons) 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons)

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Expert Answer

Step 1

a. According to the production possibility frontier Honduras can either produce 4000 tons of steel or 8000 tons of bananas. Brazil on the other hand, can produce either 9000 tons of steel or 9000 tons of bananas.

Opportunity cost of producing 1 banana is 0.5 steel in Honduras and 1 steel in Brazil. Similarly, the opportunity cost of producing 1 steel is 2 bananas in Ho...

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HONDURA'S PPF Govot soo0 noon 3000 2000 lovo loto 20t0 3ano Scm ooD To0o 8ooo/ Sleel Cintons) BANANAS Lintons)

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