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21 Jun 2018

The figure below shows the production possibilities frontiers for Luxembourg and Thailand. Each country produces two goods, chairs and HDTVs. Assume both countries have the same resources. Luxembourg Thailand Chairs Chain HDTV HDTV Opportunity Cost of Production Chairs HDTVS Luxembourg Thailand c) (2 points) Suppose the two countries now decide to specialize and trade. Who should produce chairs and who should produce HDTVs? Complete the table below to show each country's output with specialization.

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Patrina Schowalter
Patrina SchowalterLv2
23 Jun 2018

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Related questions

1. The accompanying Production Possibilities Frontiers (PPF) represent hypothetical levels of production for Honduras and Brazil. Assume the two countries are initially producing and consuming in autarky at point A on each of their PPF's. Suppose these countries decide to trade. Each country will specialize in the production of a good for which it has a comparative advantage.

What will each country produce?

A.Honduras will produce both goods.

B. Honduras will produce Steel and Brazil bananas.

C. Honduras will produce bananas and Brazil steel.

D. Brazil will produce both goods.

Ā 

Honduras's PPF Brazil's PPF 10,000 10,000 9,000 9,000 8,000 8,000 Post Trade Consumption 7,000 7,000 .000 000 5,000 5.000 9.000 1,000 3,000 3,000 Post Trade Consumption 2,000 2,000 1,000 1,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons) 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Steel (in tons)

The law of comparative advantage states that:

a. each country should specialize in producing the good with the lowest opportunity cost.

b. a country that is able to produce something using fewer resources than other countries would gain from specialization and trade.

c. international trade barriers slow the introduction of new goods and better technologies.

d. countries can gain from trade if production is subject to economies of scale.

e. countries must agree on how much of one good exchanges for another.

(1) Implicit costs are the opportunity costs of using the resources of ---------------------------------------------

a. outsiders.

b. banks.

c. retained earnings.

d. owners.

(2) The Principle of Comparative Advantage implies that:

a. Two countries can benefit from trade only if one country is better at producing a good compared to another in absolute terms.

b. Two countries can benefit from specialization and trade even if one country is better at one good compared to another in absolute terms.

c. all countries should specialize in whatever they have a higher opportunity cost to producing.

d. all countries are better off when each produces all goods for themselves and they do not trade with each other.

(3) Points inside a production possibilities frontier represent

a. unemployment of resources

b. unattainable production combinations

c. efficient use of resources

d. supply exceeds demand

(4) In a free market --------------------------------

a. governments intervene

b. governments plan production

c. governments interfere

d. prices adjust to reconcile scarcity and desires

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