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. PISTACHIOS (Millions of pounds) 48 42 36 30 24 18 12 6 0 PPF 0 6 12 A Denali 18 24 30 CORN (Millions of pounds) 36 42 48 Consumption After Trade ?

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Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
Section: Chapter Questions
Problem 8SQ
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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 6 million pounds of corn for 6 million pounds of pistachios. This ratio of goods is known as the price of trade between Glacier and Denali.

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.
PISTACHIOS (Millions of pounds)
48
42
36
30
24
18
12
6
0
0
PPF
I
6
12
Denali
18
24
30
CORN (Millions of pounds)
36
42
48
++
Consumption After Trade
?
Transcribed Image Text: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. PISTACHIOS (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF I 6 12 Denali 18 24 30 CORN (Millions of pounds) 36 42 48 ++ Consumption After 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 pistachios, each initially
(i.e., before specialization and trade) producing 18 million pounds of corn and 9 million pounds of pistachios, as indicated by the grey stars marked
with the letter A.
PISTACHIOS (Millions of pounds)
48
42
36
30
24
18
12
6
0
0
PPF
6
Glacier
12
18 24 30
36
CORN (Millions of pounds)
42
48
?
PISTACHIOS (Millions of pounds)
48
42
36
30
24
18
12
0
0
PPF
I
6
|
Denali
12
18 24 30 36
CORN (Millions of pounds)
42
48
?
Transcribed Image Text: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 pistachios, each initially (i.e., before specialization and trade) producing 18 million pounds of corn and 9 million pounds of pistachios, as indicated by the grey stars marked with the letter A. PISTACHIOS (Millions of pounds) 48 42 36 30 24 18 12 6 0 0 PPF 6 Glacier 12 18 24 30 36 CORN (Millions of pounds) 42 48 ? PISTACHIOS (Millions of pounds) 48 42 36 30 24 18 12 0 0 PPF I 6 | Denali 12 18 24 30 36 CORN (Millions of pounds) 42 48 ?
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