Answer Happy

1. Working with Numbers and Graphs Q1 Suppose that two economies, named Arcardia and Euphoria, can use their resources to produce good X, good Y, or a combination of both. The following table shows the four different combinations of the two goods each country can produce. Combinations Arcardia Good X Good Y 135 0 Euphoria Good x Good Y 30 0 A B 90 30 20 50 45 60 10 100 D 0 90 0 150 Arcardia has a comparative advantage in the production of good and Euphoria has a comparative advantage in the production of good Which of the following terms of trade would allow both Arcardia and Euphoria to gain from trade? Check all that apply. 1/10 unit of good X per unit of good Y 1/6 unit of good X per unit of good Y 2 units of good X per unit of good Y 4/3 units of good X per unit of good Y

Initially, neither of the two economies is specializing in the production of one of the two goods, nor are the two economies trading with each other. In the no-specialization-no-trade (NS-NT) scenario, Arcadia produces and consumes 90 units of good X and 30 units of good V (combination B), and Euphoria produces and consumes 10 units of good X and 100 units of good combination C). Now suppose that each economy decides to completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the economy that produces good X will produce units of good X, and the economy that produces good y will units of good produce Suppose the economy that produces good X trades 40 units of good X to the other economy in exchange for 48 units of good Y. Complete the following table by entering each economy production decisions, the amount of each good that each economy exports or imports, each economy's final consumption of each good with trade and the gains from trade-the amount by which each economy has increased its consumption or cach good relative to the NS-NT scenario, Arcardia Euphoria Good x Good Y Good x Good Y (Units) (Units) (Units) (Units) No-Specialization-No-Trade Case Production and consumption 90 30 10 100 Specialization-Trade Case Production Trade action Consumption Gains from trade