The table below shows the maximum amounts of food and clothing that two nations, A and B, can produce.Draw the production possibilities curve for A and B using the below graphs.Assume constant costs. (a) What is the cost ratio for the two products?(b) If each nation specializes according to comparative advantage, who should produce and trade each product? Why?(c) What will be the range for the terms of trade? If the terms are set at 1 food = 2 clothing, show how the trading possibilities lines will change in the graph.Explain.

Question

The table below shows the maximum amounts of food and clothing that two nations, A and B, can produce.Draw the production possibilities curve for A and B using the below graphs.Assume constant costs.   (a) What is the cost ratio for the two products?(b) If each nation specializes according to comparative advantage, who should produce and trade each product? Why?(c) What will be the range for the terms of trade? If the terms are set at 1 food = 2 clothing, show how the trading possibilities lines will change in the graph.Explain.

Quizplus · Accepted Answer

The Answer of The table below shows the maximum amounts of food and clothing that two nations, A and B, can produce.Draw the production possibilities curve for A and B using the below graphs.Assume constant costs.   (a) What is the cost ratio for the two products?(b) If each nation specializes according to comparative advantage, who should produce and trade each product? Why?(c) What will be the range for the terms of trade? If the terms are set at 1 food = 2 clothing, show how the trading possibilities lines will change in the graph.Explain.

The Table Below Shows the Maximum Amounts of Food and Clothing