Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. 4. Specialization and tradeWhen a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner.Because of this comparative advantage, both countries benefit when they specialize and trade with each other.The following graphs show the production possibilities frontiers (PPFS) for Freedonia and Lamponia. Both countries produce grain and tea, each initially(that is, before specialization and trade) producing 6 million pounds of grain and 3 million pounds of tea, as indicated by grey points (star symbols)labeled point A.TEA (Millions of pounds)1614121064200PPF2Freedonia4 68 1012GRAIN (Millions of pounds)14 16(?)Freedonia has a comparative advantage in the production ofproduction ofmost the two countries can produce isTEA (Millions of pounds)161412108200PPF2Lamponia10 12GRAIN (Millions of pounds)+14 16(?)while Lamponia has a comparative advantage in theIf each fully specializes (that is, produces only the good for which each has a comparative advantage), themillion pounds of grain andmillion pounds of tea.Suppose that Freedonia and Lamponia specialize and open up to international trade, and the terms of trade in the world market are 1 pound of grainfor 1 pound of tea. That is, Freedonia is willing to sell Lamponia 1 pound of grain in exchange for 1 pound of tea, and Lamponia is willing to sellFreedonia 1 pound of tea in exchange for 1 pound of grain. The countries decide to exchange 2 million pounds of grain for 2 million pounds of tea.The following graph shows the same PPF for Freedonia as before, as well as its initial consumption at point A. Use the green line (triangle symbol) toplot the trading possibilities line (TPL) for Freedonia. Then place the black point (plus symbol) on the trading possibilities line to indicate Freedonia'sconsumption after specialization and trade.

Production Possibility Curve (PPC) refers to the curve that shows the various combinations of two…

4. Specialization and trade When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other. The following graphs show the production possibilities frontiers (PPFS) for Freedonia and Lamponia. Both countries produce grain and tea, each initially (that is, before specialization and trade) producing 6 million pounds of grain and 3 million pounds of tea, as indicated by grey points (star symbols) labeled point A. TEA (Millions of pounds) 16 14 12 10 6 2 0 0 PPF 2 " Freedonia A 12 4 6 8 10 GRAIN (Millions of pounds) 14 16 Freedonia has a comparative advantage in the production of production of most the two countries can produce is ? TEA (Millions of pounds) 16 14 12 10 2 0 0 PPF 2 Lamponia 1 | A 4 6 8 10 12 GRAIN (Millions of pounds) 14 16 ? while Lamponia has a comparative advantage in the ▼. If each fully specializes (that is, produces only the good for which each has a comparative advantage), the million pounds of grain and million pounds of tea. Suppose that Freedonia and Lamponia specialize and open up to international trade, and the terms of trade in the world market are 1 pound of grain for 1 pound of tea. That is, Freedonia is willing to sell Lamponia 1 pound of grain in exchange for 1 pound of tea, and Lamponia is willing to sell Freedonia 1 pound of tea in exchange for 1 pound of grain. The countries decide to exchange 2 million pounds of grain for 2 million pounds of tea. The following graph shows the same PPF for Freedonia as before, as well as its initial consumption at point A. Use the green line (triangle symbol) to plot the trading possibilities line (TPL) for Freedonia. Then place the black point (plus symbol) on the trading possibilities line to indicate Freedonia's consumption after specialization and trade.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 5PA

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Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

4. Specialization and trade
When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner.
Because of this comparative advantage, both countries benefit when they specialize and trade with each other.
The following graphs show the production possibilities frontiers (PPFS) for Freedonia and Lamponia. Both countries produce grain and tea, each initially
(that is, before specialization and trade) producing 6 million pounds of grain and 3 million pounds of tea, as indicated by grey points (star symbols)
labeled point A.
TEA (Millions of pounds)
16
14
12
10
6
4
2
0
0
PPF
2
Freedonia
4 6
8 10
12
GRAIN (Millions of pounds)
14 16
(?)
Freedonia has a comparative advantage in the production of
production of
most the two countries can produce is
TEA (Millions of pounds)
16
14
12
10
8
2
0
0
PPF
2
Lamponia
10 12
GRAIN (Millions of pounds)
+
14 16
(?)
while Lamponia has a comparative advantage in the
If each fully specializes (that is, produces only the good for which each has a comparative advantage), the
million pounds of grain and
million pounds of tea.
Suppose that Freedonia and Lamponia specialize and open up to international trade, and the terms of trade in the world market are 1 pound of grain
for 1 pound of tea. That is, Freedonia is willing to sell Lamponia 1 pound of grain in exchange for 1 pound of tea, and Lamponia is willing to sell
Freedonia 1 pound of tea in exchange for 1 pound of grain. The countries decide to exchange 2 million pounds of grain for 2 million pounds of tea.
The following graph shows the same PPF for Freedonia as before, as well as its initial consumption at point A. Use the green line (triangle symbol) to
plot the trading possibilities line (TPL) for Freedonia. Then place the black point (plus symbol) on the trading possibilities line to indicate Freedonia's
consumption after specialization and trade.

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