Draw a graph for A, B, C, D, E Two countries, Greenland and Westland, can each produce

Draw a graph for A, B, C, D, E

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Two countries, Greenland and Westland, can each produce two items: wheat and gasoline. Westland can produce 100 tons of wheat when no gasoline is produced (and 50 tons of gasoline when no wheat is produced) while Greenland can produce 150 tons of gasoline when no wheat is produced (and 120 tons of wheat when no gasoline is produced. A) Sketch the PPCs for the 2 countries on separate graphs (with wheat on the x-axis). Determine the equations of the 2 PPCs B) Is this a case of absolute or relative competitive advantage ? C) Under autarky, Westland consumes equal amounts of wheat and gasoline. What are these amounts ? Also under autarky, Greenland consumes twice as much gasoline as wheat. What are these amounts ? D) The two countries decide to trade with each other. Westland prduces only wheat, Greenland only gasoline. Under free trade, each consumes the same relative amounts of wheat and gasoline as under autarky. What is the trade price that allows them to do so ? What are the gains from free trade for each country? E) Add the CPCs to the two graphs from part A and show the consumption points. Two countries, Greenland and Westland, can each produce two items: wheat and gasoline. Westland can produce 100 tons of wheat when no gasoline is produced (and 50 tons of gasoline when no wheat is produced) while Greenland can produce 150 tons of gasoline when no wheat is produced (and 120 tons of wheat when no gasoline is produced. A) Sketch the PPCs for the 2 countries on separate graphs (with wheat on the x-axis). Determine the equations of the 2 PPCs B) Is this a case of absolute or relative competitive advantage ? C) Under autarky, Westland consumes equal amounts of wheat and gasoline. What are these amounts ? Also under autarky, Greenland consumes twice as much gasoline as wheat. What are these amounts ? D) The two countries decide to trade with each other. Westland prduces only wheat, Greenland only gasoline. Under free trade, each consumes the same relative amounts of wheat and gasoline as under autarky. What is the trade price that allows them to do so ? What are the gains from free trade for each country? E) Add the CPCs to the two graphs from part A and show the consumption points.

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A Sketching the PPCs for Greenland and Westland Greenlands PPC The PPC for Greenland shows the tradeoff between producing gasoline and producing wheat ... View the full answer