1. 1. Paula can produce any of the following combinations of goods X and Y: (a)...

 

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1. 1. Paula can produce any of the following combinations of goods X and Y: (a) 200X and OY, (b) 100X and 50Y, and (c) OX and 100Y. Michael can produce any of the following combinations of goods X and Y: (a) 100X and OY, (b) 50X and 80Y, and (c) OX and 160Y. Who has a comparative advantage is in the production of good X? of good Y? Explain your answer. 2. 2. Using the data in Problem 1, prove (that is, show that their PPFs shift out after specialization and exchange) that both Paula and Michael can be made better off through specialization and trade. 3. Using the data in the table, answer the following questions: (a) For which good does China have a comparative advantage? (b) For which good does India have a comparative advantage? (c) What might be a set of favorable terms of trade for the two countries? (d) Prove that both countries would be better off in the specialization-trade case than in the no specialization-no trade case. Points on Production Possibilities Frontier A B C D Good X 150 100 50 0 CHINA Good Y 0 25 50 75 Good X 90 60 30 0 INDIA Good Y 0 60 120 180 1. 1. Paula can produce any of the following combinations of goods X and Y: (a) 200X and OY, (b) 100X and 50Y, and (c) OX and 100Y. Michael can produce any of the following combinations of goods X and Y: (a) 100X and OY, (b) 50X and 80Y, and (c) OX and 160Y. Who has a comparative advantage is in the production of good X? of good Y? Explain your answer. 2. 2. Using the data in Problem 1, prove (that is, show that their PPFs shift out after specialization and exchange) that both Paula and Michael can be made better off through specialization and trade. 3. Using the data in the table, answer the following questions: (a) For which good does China have a comparative advantage? (b) For which good does India have a comparative advantage? (c) What might be a set of favorable terms of trade for the two countries? (d) Prove that both countries would be better off in the specialization-trade case than in the no specialization-no trade case. Points on Production Possibilities Frontier A B C D Good X 150 100 50 0 CHINA Good Y 0 25 50 75 Good X 90 60 30 0 INDIA Good Y 0 60 120 180

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D Opportunity cost of 4 for Paula 2 x opportunity cast of for Michael Paula has CA in X Michael ... View the full answer