a. Assuming the above production data, create a diagram for each country's respective production possibilities frontier...

 

  

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a. Assuming the above production data, create a diagram for each country's respective production possibilities frontier - assume constant opportunity costs along the PPF. b. Which country has an absolute advantage in production of each good? And which country has the comparative advantage in cloth production? And soybeans production? Show how you determined your answer for full credit. c. Assume that in autarky each country produces and consumes both goods in the following amounts. Both countries are productively efficient- show this level of production and consumption on their respective PPF in part a. You do not need to draw a new graph. Cloth Production and Consumption Peru Soybeans 100 and 150 Nigeria 20 and 35 d. Now, assume that they agree to trade by first producing only the good in which they have a comparative advantage. Show the level of production in a table. e. Based on mediation by your instructor, the terms of trade are 1 soybean for 3 cloths and that that the Peru sends 40 soybeans to Nigeria. Calculate the level of consumption for both countries in both goods after trading. Show this in a new table f. True or False: Peru would be better off not trading with Nigeria but should produce more cloth domestically. EXTRA CREDIT - In autarky, before trade, if you are a cloth maker in Nigeria, and you want to barter for soybeans, how many units of cloth would you need to provide a soybean farmer for one unit soybean? Are Nigerian cloth makers better off trading with Peru than with domestic farmers? Cloth Soybeans Production Possibility (per day) Nigeria 160 Peru 400 or 200 or 40 a. Assuming the above production data, create a diagram for each country's respective production possibilities frontier - assume constant opportunity costs along the PPF. b. Which country has an absolute advantage in production of each good? And which country has the comparative advantage in cloth production? And soybeans production? Show how you determined your answer for full credit. c. Assume that in autarky each country produces and consumes both goods in the following amounts. Both countries are productively efficient- show this level of production and consumption on their respective PPF in part a. You do not need to draw a new graph. Cloth Production and Consumption Peru Soybeans 100 and 150 Nigeria 20 and 35 d. Now, assume that they agree to trade by first producing only the good in which they have a comparative advantage. Show the level of production in a table. e. Based on mediation by your instructor, the terms of trade are 1 soybean for 3 cloths and that that the Peru sends 40 soybeans to Nigeria. Calculate the level of consumption for both countries in both goods after trading. Show this in a new table f. True or False: Peru would be better off not trading with Nigeria but should produce more cloth domestically. EXTRA CREDIT - In autarky, before trade, if you are a cloth maker in Nigeria, and you want to barter for soybeans, how many units of cloth would you need to provide a soybean farmer for one unit soybean? Are Nigerian cloth makers better off trading with Peru than with domestic farmers? Cloth Soybeans Production Possibility (per day) Nigeria 160 Peru 400 or 200 or 40

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a To create production possibilities frontier PPF diagrams for Peru and Nigeria assuming constant opportunity costs along the PPF we can represent their production possibilities for cloth and soybeans ... View the full answer