5. Trading under increasing opportunity costsThe following graph shows the production possibilities frontier for the imaginary country of Contente under conditions of increasing costs. In theabsence of trade, the relative cost of wheat in Contente in terms of tablets (or the marginal rate of transformation (MRT) of wheat into tablets) isshown by the slope of line , tangent to the production possibilities frontier at point A.WHEAT (Bushels)250200175150125100S2501015 20 2530TABLETS35 404510..Consumption After Trade(?) Which of the following most accurately describes Contente's economy in the absence of trade?O Contente produces 15 tablets and 195 bushels of wheat.O Contente produces 195 bushels of wheat but consumes only 150 bushels of wheat.O Contente produces and consumes 15 tablets and 150 bushels of wheat.O Contente produces and consumes 15 tablets and 195 bushels of wheat.O Contente consumes 15 tablets and 195 bushels of wheatAt point A, the slope of line f, reveals that Contente must foregoslope.)bushels of wheat in order to produce 1 tablet. (Hint: Select a line to see its

The phrase "opportunity cost" describes a circumstance in which one gives up one benefit in order to…

5. Trading under increasing opportunity costs The following graph shows the production possibilities frontier for the imaginary country of Contente under conditions of increasing costs. In the absence of trade, the relative cost of wheat in Contente in terms of tablets (or the marginal rate of transformation (MRT) of wheat into tablets) is shown by the slope of line , tangent to the production possibilities frontier at point A. 250 WHEAT (Bushels) 200 28xs # 150 100 15 20 25 30 TABLETS 35 40 4. Consumption After Trade (?)

5. Trading under increasing opportunity costs The following graph shows the production possibilities frontier for the imaginary country of Contente under conditions of increasing costs. In the absence of trade, the relative cost of wheat in Contente in terms of tablets (or the marginal rate of transformation (MRT) of wheat into tablets) is shown by the slope of line , tangent to the production possibilities frontier at point A. 250 WHEAT (Bushels) 200 28xs # 150 100 15 20 25 30 TABLETS 35 40 4. Consumption After Trade (?)

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: International Trade

Section: Chapter Questions

Problem 1.3P

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3. Absolute and comparative advantage Consider two neighboring island countries, Charisma and Fiatstan. Each has 72,000 labor hours available per week that it can use to produce corn, jeans, or a combination of both. The following table shows the amount of labor hours required to produce 1 bushel of corn or 1 pair of jeans. Corn Jeans Country (Labor hours per bushel) (Labor hours per pair) Charisma 80 16 Fiatstan 24 12 has an absolute advantage in the production of corn, and has an absolute advantage in the production of jeans. Initially, suppose Charisma uses 54,000 hours of labor per week to produce corn and 18,000 hours per week to produce jeans, while Fiatstan uses 18,000 hours of labor per week to produce corn and 54,000 hours per week to produce jeans. Assume there are no other countries willing to trade goods, so in the absence of trade between these two countries, each country consumes the amount of com and jeans it produces. Charisma's opportunity cost of producing 1 bushel of…
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Question & Use the table to answer the question. Apples Bananas Country A Country B 800 500 O a O b Ос Od 1500 If all resources of Country A and Country B were dedicated toward the production of either apples or bananas, the maximum production of each is summarized in the table above. In order for both countries to benefit from trade, which country should specialize in banana productio and why? 1600 Review Answers Country A since it has the absolute advantage in banana production. Country A since it has the comparative advantage in banana production. Country B since it has the comparative advantage in banana production. Country B since it has the absolute advantage in banana production. Saved at 8:09 am Support | Schoology Blog | PRIVACY POLICY | Terms of
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