while Denali has a comparative advantage in the Shenandoah has a comparative advantage in the production of . Suppose that Shenandoah and Denali specialize in the production of the goods in which each has a production of million pounds of lentils and million pounds of comparative advantage. After specialization, the two countries can produce a total of peas. Suppose that Shenandoah and Denali agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 20 million pounds of peas for 20 million pounds of lentils. This ratio of goods is known as the price of trade between Shenandoah and Denali. The following graph shows the same PPF for Shenandoah as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Shenandoah's consumption after trade.

while Denali has a comparative advantage in the Shenandoah has a comparative advantage in the production of . Suppose that Shenandoah and Denali specialize in the production of the goods in which each has a production of million pounds of lentils and million pounds of comparative advantage. After specialization, the two countries can produce a total of peas. Suppose that Shenandoah and Denali agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 20 million pounds of peas for 20 million pounds of lentils. This ratio of goods is known as the price of trade between Shenandoah and Denali. The following graph shows the same PPF for Shenandoah as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Shenandoah's consumption after trade.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter18: Trading With Other Nations

Section: Chapter Questions

Problem 8AA

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