Purchase Solution

Production Possibilities Before and After Trade

Not what you're looking for?

Ask Custom Question

Plot the production possibilities data for each of the two countries separately. Referring to your graphs, answer the following:
a. What is each country's cost ratio of producing plums and apples.
b. Which nation should specialize in which product?
c. Show the trading possibilities lines for each nation if the actual terms of trade are 1 plum for 2 apples. (Plot these lines on your graph.)
d. Suppose the optimum product mixes before specialization and trade mere alternative B in New Zealand and alternative S in Spain. V/hat would be the gains from specialization and trade?

See attached file for full problem description.

Attachments
Purchase this Solution
Solution Summary

Production possibilities before and after trade and specialization for two countries are discussed in this solution.

Solution Preview

a) See the attached graphs. New Zealand's cost ratio is 1 plum to 4 apples (or 1 apple to 1/4 plum). Spain's cost ratio ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

View More Free Quizzes
Related BrainMass Solutions

  • opportunity cost

    346980 possibilities data Answer the next question on the basis of the following production possibilities data for Landia and Scandia: Landia production possibilities: A B C D E

  • Fundamental economic concept of opportunity costs

    The production possibilities model, trade, and globalization. Retrieved on October 21, 2011, from http://docs.google.com/viewer?

  • Production and Consumption with and without Tariffs

    The new Production and Consumption will be where the New Tariff included Price line meet the Supply and Demand Curves. You can find the quantity of imports like before by taking the difference between Consumption and Production.

  • Production, Costs, and Profits

    How does trade affect the production possibilities frontier? Explain. Trade affects the production possibilities frontier because trade increases the combination of output that the country can consumer.

  • Macroeconomics

    If the Germans are consuming and producing 40 autos and 40 computers before trade and the Canadians are producing and consuming 60 autos and 80 computers before trade, what are the potential gains from trade (if any) in terms of additional production

  • Production possibilites frontier and trade

    This posting helps with problems about production possibilities in frontiers and trade.

  • Explain the Concept of Comparative and Absolute Advantage

    Advantage, and how that concept affects international trade and the Production Possibilities Frontier (PPF).

  • International Trade

    isovalue lines production possibilities frontier indifference curve 3) If rice production is land intensive and computer production is labor intensive, though both good require some land and labor, the two-good production possibilities frontier

  • A country's production possibilities frontier

    127700 A country's production possibilities frontier What happens to a country's production possibilities frontier if a law is passed prohibiting workers from ever working in an industry other than the one they are currently employed in.

View More Related Solutions