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Consider Two Countries,A and B,that Can Use Their Productive Resources

Question 34

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Consider two countries,A and B,that can use their productive resources to produce two goods-computers and food.If country A devotes all of its resources to computer production,it produces 100 million computers.If it devotes its resources to food production,it produces 300 million units of food.Likewise,if country B devotes its resources to computer production,it produces 100 million computers.If B devotes its resources to food production,it produces 100 million units of food.In separate graphs,draw the production possibility curve for each country.What do the production possibilities curves show? Which country has comparative advantage in computer production? Which country has comparative advantage in food production? Explain.Suggest a mutually beneficial trading arrangement between these two countries.

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The production possibility curves show t...

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