1) How much cheese 2) How much cheese is produced in Italy? is consumed in Italy?

MACROECONOMICS
14th Edition
ISBN:9781337794985
Author:Baumol
Publisher:Baumol
Chapter7: Economic Growth: Theory And Policy
Section: Chapter Questions
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Assume that the world economy consists of two
countries: Italy and Greece. Each country can produce
cheese and lamb. Italy can produce 1200 tons of cheese
or 400 tons of lamb or any linear combination of cheese
and lamb satisfies cheese+3×lamb=1200. Greece can
produce 1000 tons of cheese or 500 tons of lamb or any
linear combination of cheese and lamb satisfies
cheese+2xlamb=1000. People in both countries would
like to consume as much lamb as cheese. Countries can
freely trade with each other.
1) How much cheese is produced in Italy?
2) How much cheese is consumed in Italy?
Transcribed Image Text:Assume that the world economy consists of two countries: Italy and Greece. Each country can produce cheese and lamb. Italy can produce 1200 tons of cheese or 400 tons of lamb or any linear combination of cheese and lamb satisfies cheese+3×lamb=1200. Greece can produce 1000 tons of cheese or 500 tons of lamb or any linear combination of cheese and lamb satisfies cheese+2xlamb=1000. People in both countries would like to consume as much lamb as cheese. Countries can freely trade with each other. 1) How much cheese is produced in Italy? 2) How much cheese is consumed in Italy?
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