Question: 5) Below are production graphs for two countries Up and Down. Each country produces only 2 goods at quantities they believe is the optimum

5) Below are production graphs for two countries Up and Down. Each country produces only 2 goods at quantities they believe is the optimum production point (plotted on the graphs). Calculate and show to each country's leader that they would be best to specialize in what they do best and trade for what they do not produce as efficiently. I) Draw the changes on the graphs and i) fill in the table to indicate the benefit of specialization and trade with your recommended quantities. (2+2+2 marks) Country Up Country Down 40 40 20 20 10 10 20 B 10 20 Before Specialization Good A With Specialization Good A Good B With Trade Good A Good B Country Good B Up Down
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Country Up Country Up can produce a maximum of 40 units of Good A or 10 units of Good B The opportun... View full answer
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