When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lowe

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When A Country Has A Comparative Advantage In The Production Of A Good It Means That It Can Produce This Good At A Lowe 1 (29.32 KiB) Viewed 43 times

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When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFS) for Maldonia and Desonia. Both countries produce grain and coffee, each initially (.e., before specialization and trade) producing 24 million pounds of grain and 12 million pounds of coffee, as indicated by the grey stars marked with the letter A. Maldonia Desonia 84 64 56 48 40 32 24 COFFEE (Milions of pounds) 54 #229 40 40 32 24 W 0 PPF " Slope: 0.5 X-Intercept: 48 Y-Intercept: 241 16 24 33 40 48 GRAIN (Milions of pounds) 14 COFFEE (Mions of pounds) suos 0 PPF . 24, 12 1024 32 40 48 54 GRAIN (Mions of pounds) 64
Maldonia has a comparative advantage in the production of while Desonia has a comparative advantage in the Suppose that Maldonia and Desonia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of grain and million pounds of production of coffee. Suppose that Maldonia and Desonia 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 16 million pounds of grain for 16 million pounds of coffee. This ratio of goods is known as the price of trade between Maldonia and Desonia.
The following graph shows the same PPF for Maldonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Maldonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. Maldonia 64 Consumption After Trade COFFEE (Milions of pounds) 56 S 40 32 24 PPF 16 . B 18 24 32 40 48 GRAIN (Millions of pounds)
pols The following graph shows the same PPF for Desonia as before, as well as its initial consumption at point A. As you did for Maldonia, place a black point (plus symbol) on the following graph to indicate Desonia's consumption after trade. ? Desonia 64 Consumption After Trade COFFEE (Millions of pounds) 50 48 PPF 40 32 24 16 B 9 1.8 40 AB 24 32 GRAIN (Millions of pounds) 14
True or False: Without engaging in international trade, Maldonia and Desonia would have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.)) True False