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Figure: Rice and Shirts
-(Figure: Rice and Shirts) Use the PPFs shown for the United States and India. If the United States and India specialize and trade, one country will trade away 20 pounds of rice in exchange for 20 shirts from the other. Compared with no trade, ______ will be able to consume ______ additional shirts, and _____ will be able to consume an additional ______ pounds of rice.
A) the United States; 0; India; 8.6
B) India; 5; the United States; 0
C) the United States; 4; India; 8.6
D) India; 8.6; the United States; 4

Question

Use the following to answer questions:
Figure: Rice and Shirts 
-(Figure: Rice and Shirts) Use the PPFs shown for the United States and India. If the United States and India specialize and trade, one country will trade away 20 pounds of rice in exchange for 20 shirts from the other. Compared with no trade, ______ will be able to consume ______ additional shirts, and _____ will be able to consume an additional ______ pounds of rice.
A) the United States; 0; India; 8.6 
B) India; 5; the United States; 0 
C) the United States; 4; India; 8.6 
D) India; 8.6; the United States; 4

Quizplus · Accepted Answer

According to the PPFs shown, the United States has a comparative advantage in producing shirts, while India has a comparative advantage in producing rice. If the United States and India specialize and trade, the United States will produce and export shirts, while India will produce and export rice. As a result, the United States will be able to consume an additional 4 shirts (the difference between the 20 shirts it trades for and the 16 shirts it could produce on its own), while India will be able to consume an additional 8.6 pounds of rice (the difference between the 20 pounds of rice it trades for and the 11.4 pounds it could produce on its own). Therefore, the best choice is C.

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