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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 Yosemite and Rainier. Both countries produce almonds and basil, each initially (i.e., before specialization and trade) producing 36 million pounds of almonds and 18 million pounds of basil, as indicated by the grey stars marked with the letter A.
Yosemite has a comparative advantage in the production of   , while Rainier has a comparative advantage in the production of   . Suppose that Yosemite and Rainier 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 almonds and
million pounds of basil.
Suppose that Yosemite and Rainier 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 36 million pounds of almonds for 36 million pounds of basil. This ratio of goods is known as the price of trade between Yosemite and Rainier.
The following graph shows the same PPF for Yosemite as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Yosemite's consumption after trade.
Note: Dashed drop lines will automatically extend to both axes.
The following graph shows the same PPF for Rainier as before, as well as its initial consumption at point A.
As you did for Yosemite, place a black point (plus symbol) on the following graph to indicate Rainier's consumption after trade.
True or False: Without engaging in international trade, Yosemite and Rainier would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.)

AnswerYosemite has a comparative advantage in the production ofalmonds   , while Rainier has a comparative advantage in the production ofbasil   . Suppose that Yosemite and Rainier specialize in the production of the goods in which each has a comparative advantage. After speciali...

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Posted by Cleveland on August 30, 2024

4. Specialization and trade

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 Glacier and Denali. Both countries produce corn and lentils, each initially (i.e., before specialization and trade) producing 30 million pounds of corn and 15 million pounds of lentils, as indicated by the grey stars marked with the letter A.
Glacier has a comparative advantage in the production of    , while Denali has a comparative advantage in the production of    . Suppose that Glacier and Denali 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 lentils and
million pounds of corn.
Suppose that Glacier and Denali 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 20 million pounds of corn for 20 million pounds of lentils. This ratio of goods is known as the price of trade between Glacier and Denali.
The following graph shows the same PPF for Glacier as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Glacier's consumption after trade.
Note: Dashed drop lines will automatically extend to both axes.
The following graph shows the same PPF for Denali as before, as well as its initial consumption at point A.
As you did for Glacier, place a black point (plus symbol) on the following graph to indicate Denali's consumption after trade.
True or False: Without engaging in international trade, Glacier and Denali 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.)

Glacier has a comparative advantage in the production oflentils   , while Denali has a comparative advantage in the production ofcorn   . Suppose that Glacier and Denali specialize in the production of the goods in which each has a comparative advantage. After specialization, the...

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Posted by Cleveland on August 29, 2024
Suppose there exist two imaginary countries, Everglades and Glacier. Their labor forces are each capable of supplying four million hours per day that can be used to produce pistachios, chinos, or some combination of the two. The following table shows the amount of pistachios or chinos that can be produced by one hour of labor.
CountryPistachiosChinos
(Pounds per hour of labor)(Pairs per hour of labor)
Everglades416
Glacier612
Suppose that initially Glacier uses 1 million hours of labor per day to produce pistachios and 3 million hours per day to produce chinos, while Everglades uses 3 million hours of labor per day to produce pistachios and 1 million hours per day to produce chinos. As a result, Everglades produces 12 million pounds of pistachios and 16 million pairs of chinos, and Glacier produces 6 million pounds of pistachios and 36 million pairs of chinos. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of pistachios and chinos it produces.
Everglades's opportunity cost of producing 1 pound of pistachios is4 pairs   of chinos, and Glacier's opportunity cost of producing 1 pound of pistachios is    of chinos. Therefore,    has a comparative advantage in the production of pistachios, and    has a comparative advantage in the production of chinos.
Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces pistachios will produce
million pounds per day, and the country that produces chinos will produce
million pairs per day.
In the following table, enter each country's production decision on the third row of the table (marked “Production”).
Suppose the country that produces pistachios trades 14 million pounds of pistachios to the other country in exchange for 42 million pairs of chinos.
In the following table, select the amount of each good that each country exports and imports in the boxes across the row marked “Trade Action,” and enter each country's final consumption of each good on the line marked “Consumption.”
When the two countries did not specialize, the total production of pistachios was 18 million pounds per day, and the total production of chinos was 52 million pairs per day. Because of specialization, the total production of pistachios has increased by
million pounds per day, and the total production of chinos has increased by
million pairs per day.
Because the two countries produce more pistachios and more chinos under specialization, each country is able to gain from trade.
Calculate the gains from trade—that is, the amount by which each country has increased its consumption of each good relative to the first row of the table. In the following table, enter this difference in the boxes across the last row (marked “Increase in Consumption”).
Everglades
Glacier
PistachiosChinosPistachiosChinos
(Millions of pounds)(Millions of pairs)(Millions of pounds)(Millions of pairs)
Without Trade
Production1216636
Consumption1216636
With Trade
Production
Trade action                
Consumption
Gains from Trade
Increase in Consumption

Everglades's opportunity cost of producing 1 pound of pistachios is4 pairs   of chinos, and Glacier's opportunity cost of producing 1 pound of pistachios is2 pairs   of chinos. Therefore,Glacier   has a comparative advantage in the production of pistachios, andEverglade...

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Posted by Cleveland on August 29, 2024
Elijah and Aneesha are farmers. Each one owns an 18-acre plot of land. The following table shows the amount of zucchini and watermelon each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing zucchini or watermelon or to produce zucchini on some of the land and watermelon on the rest.
ZucchiniWatermelon
(Pounds per acre)(Pounds per acre)
Elijah123
Aneesha186
On the following graph, use the blue line (circle symbol) to plot Elijah's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Aneesha's PPF.
    has an absolute advantage in the production of zucchini, and    has an absolute advantage in the production of watermelon.
Elijah's opportunity cost of producing 1 pound of watermelon is
pounds of zucchini, whereas Aneesha's opportunity cost of producing 1 pound of watermelon is
pounds of zucchini. Because Elijah has a    opportunity cost of producing watermelon than Aneesha,    has a comparative advantage in the production of watermelon, and    has a comparative advantage in the production of zucchini.

Elijah's opportunity cost of producing 1 pound of watermelon is4pounds of zucchini, whereas Aneesha's opportunity cost of producing 1 pound of watermelon is3pounds of zucchini. Because Elijah has ahigher   opportunity cost of producing watermelon than Aneesha,Aneesha   has a comp...

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Posted by Cleveland on August 29, 2024

1. Specialization and production possibilities

Suppose Scotland produces only scooters and bikes. The resources that are used in the production of these two goods are not specialized—that is, the same set of resources is equally effective at producing both bikes and scooters.
The shape of Scotland's production possibilities frontier (PPF) should reflect the fact that as Scotland produces more bikes and fewer scooters, the opportunity cost of producing each additional bike    .
The following graphs show two possible PPFs for Scotland's economy: a straight-line PPF (PPF1) and a bowed-out PPF (PPF2).
Based on the previous description, the trade-off Scotland faces between producing bikes and scooters is best represented by    .

The shape of Scotland's production possibilities frontier (PPF) should reflect the fact that as Scotland produces more bikes and fewer scooters, the opportunity cost of producing each additional bikeremains constant   .ased on the previous description, the trade-off Scotland faces between ...

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Posted by Cleveland on August 29, 2024
Shahina is a tax accountant. She receives $100 per hour doing tax returns. She can type 10,000 characters per hour into spreadsheets. She can hire an assistant who types 2,500 characters per hour into spreadsheets. Which of the following statements is true?

c. Shahina should hire the assistant as long as she pays the assistant less than $25 per hour....

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Posted by Cleveland on August 29, 2024

Use the production possibilities frontiers in the exhibit to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month.

The opportunity cost of producing 1 metric ton of beef in Colombia is ________.

d. 3 tons of fruit...

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Posted by Cleveland on August 29, 2024

Use the production possibilities frontiers in the exhibit to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month.

Colombia will export ________.


b) Fruit...

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Posted by Cleveland on August 29, 2024

Use the production possibilities frontiers in the Exhibit to answer the question. Assume each country has the same number of workers, say 20 million, and that each axis is measured in metric tons per month.

Brazil has a comparative advantage in the production of ________.

c) Beef...

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Posted by Cleveland on August 29, 2024
Suppose the world consists of two countries— Canada and Mexico. Furthermore, suppose there are only two goods—food and clothing. Which of the following statements is true?


 If Canada has a comparative advantage in the production of food, then Mexico must have a comparative advantage in the production of clothing....

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Posted by Cleveland on August 29, 2024