Venezuela's Production Possibilties Boundary Units of Beer PPB Units of Silk Trade Line, Trade Line

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Venezuela's Production Possibilties Boundary
Units of Beer
Units of Silk
PPB
Trade Line,
*Trade Line
Transcribed Image Text:Venezuela's Production Possibilties Boundary Units of Beer Units of Silk PPB Trade Line, *Trade Line
The diagram at right shows the production possibilities boundaries in Venezuela for two goods, silk and beer. The
solid line represents the production possibilities boundary and the dashed line represents the trade line.
Suppose that the price of beer rises and the price of silk is unchanged.
Using the line drawing tool, show the impact of this event on the trade line.
Carefully follow the instructions above, and only draw the required objects.
The increase in the price of beer diminished the terms of trade for Venezuela. Venezuela is better off
because of the decreased consumption possibilities.
Transcribed Image Text:The diagram at right shows the production possibilities boundaries in Venezuela for two goods, silk and beer. The solid line represents the production possibilities boundary and the dashed line represents the trade line. Suppose that the price of beer rises and the price of silk is unchanged. Using the line drawing tool, show the impact of this event on the trade line. Carefully follow the instructions above, and only draw the required objects. The increase in the price of beer diminished the terms of trade for Venezuela. Venezuela is better off because of the decreased consumption possibilities.
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