What is India's opportunity cost of producing one million tons of tea? million tons of olives What is India's opportunity cost of producing one million tons of olives? million tons of tea The accompanying graphs show the production possibilities frontiers (PPFS) for Italy and India for their domestic production of olives and tea. Without trade, assume that each country is consuming olives and tea at point a. Use the information provided in the graphs to answer the following questions. Olives (millions of tons) Italy 12 10 8 60 2 a PPF 0 10 20 30 40 Tea (millions of tons) India 12 Olives (millions of tons) 4 6 Co 10 2 a 0 PPF 10 20 30 40 50 60 Tea (millions of tons)

Which country had an absolute advantage in the production of Machines?  Calculate and explain which country has a comparative advantage in the production of Machines and Cloth.

30. If the Portuguese were to insist on consuming 90 bottles of wine, what does that imply for trade between these countries?       There would be no trade.     The Portuguese would be consuming beyond their production possibilities frontier.     The English would benefit from producing their own wine.     Both countries would benefit more.     None of the above.

Q4: The figure below represents the production possibilities frontiers (PPF) for Countries A and B. Country A Country B Jackets 420 360 300 240 180 120 60 0 10 20 30 40 50 60 70 80 90 100 Jackets 420 360 300 240 180 120 60 Snowboards 0 10 20 30 40 50 60 70 80 90 100 Considering the production possibilities frontiers of both countries, we can infer that snowboard production. Both countries would be willing to agree to the following terms of trade: a. Country A; 5 jackets for each snowboard b. Country A; 3 jackets for each snowboard c. Country B; 5 jackets for each snowboard d. Country B; 3 jackets for each snowboard ermitte class use only) should specialize in

Estonia Finland One Cell Phone 40 hours 15 hours Lumber (per board foot) 8 hours 4 hours Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. Refer to Table 2-5. Does either Estonia or Finland have a comparative advantage and if so, in what product? O Both countries have the comparative advantage in both lumber and cellphones. O Estonia has an comparative advantage in lumber while Finland has the comparative advantage in cellphones. O Finland has an comparative advantage in lumber while Estonia has the comparative advantage in cellphones. O cannot be determined.

Suppose there are two countries for analyses, the United States and Indonesia. Assume that 2000 man hours are available in the United States and 36000 in Indonesia. The following table provides information on how many man-hours are needed to produce one unit of the same goods.   Indonesia United States Cloth 50 3 Machines 100 5   2.1) Which country has the comparative advantage of cloth and in machines? Show your calculations.

The following diagrams show the production possibilities frontiers (PPFS) for Armenia and Azerbaijan and their production of milk and razor trade. Which of the following statements is true when the two countries begin trading in razors and milk? Razors 15 10 5 Armenia 10 15 Milk (gallons) O Armenia will not trade with Azerbaijan O Armenia will export milk to Azerbaijan and import razors from Azerbaijan. O Armenia will export razors to Azerbaijan and import milk from Azerbaijan O Armenia will import razors and milk from Azerbaijan.. Razors 15 10 10 5 Azerbaijan 10 15 5 Milk (gallons)

Corn 60 60 80 O 120 United States 20 60 Peanuts Corn 60 Using the graph above, if Canada has a comparative advantage in corn, how much should they produce when they specialize in the production of corn? 20 Canada Peanuts

Germany Production Possibilities   (Production Alternatives) Product A B C D E F Autos 0 4 8 12 16 20 Chemicals 40 32 24 16 8 0     U.S. Production Possibilities   (Production Alternatives) Product A B C D E F Autos 0 3 6 9 12 15 Chemicals 60 48 36 24 12 0     Refer to the accompanying production possibilities tables. Data are in millions of units. Suppose that each nation specialized in producing the product for which it has a comparative advantage and the terms of trade were set at 3 units of chemicals for 1 unit of autos. In this case, Germany could obtain and consume a maximum combination of 8 million units of autos and   Multiple Choice   12 million units of chemicals.   24 million units of chemicals.   36 million units of chemicals.   48 million units of chemicals.

LENTILS (Millions of pounds) 80 70 8 60 50 40 30 20 10 + 0 0 PPF 10 Shenandoah 20 30 40 50 60 PEAS (Millions of pounds) 70 80 (?) LENTILS (Millions of pounds) 80 70 60 50 40 30 PPF 20 10 0 0 T 10 Denali 40 20 30 50 60 PEAS (Millions of pounds) 70 80 (?) Shenandoah has a comparative advantage in the production of , while Denali has a comparative advantage in the production of . Suppose that Shenandoah 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 peas. million pounds of lentils and million pounds of Suppose that Shenandoah 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 peas for 20 million pounds of lentils. This ratio of goods is known as the price of trade between Shenandoah and Denali. The following graph shows the same PPF for Shenandoah…