Assume that Atlantis and the Mushroom Kingdom use equal resources to produce consumer and capital goods,...

 

Transcribed Image Text:

Assume that Atlantis and the Mushroom Kingdom use equal resources to produce consumer and capital goods, as illustrated in the table below showing maximum possible production figures. Country Capital Goods Consumer Goods 60 units 180 units Mushroom Kingdom 20 units 100 units Atlantis a. Draw a fully labeled production possibility curve for Atlantis. Place capital goods on the vertical axis and consumer goods on the horizontal axis. Assume constant opportunity cost. b. On your graph from part (a), label an inefficient point of production I, an efficient point of production E, and an unattainable point of production U. c. Which country has the comparative advantage in the production of capital goods? Explain. d. If Atlantis shifted from producing 10 units of capital goods and 150 units of consumer goods to producing 24 units of capital goods and 108 units of consumer goods, what would be the impact on its economic growth in the long run? e. Based on the data table, what range of capital goods could be traded for 15 units of consumer goods that would be mutually beneficial? Assume that Atlantis and the Mushroom Kingdom use equal resources to produce consumer and capital goods, as illustrated in the table below showing maximum possible production figures. Country Capital Goods Consumer Goods 60 units 180 units Mushroom Kingdom 20 units 100 units Atlantis a. Draw a fully labeled production possibility curve for Atlantis. Place capital goods on the vertical axis and consumer goods on the horizontal axis. Assume constant opportunity cost. b. On your graph from part (a), label an inefficient point of production I, an efficient point of production E, and an unattainable point of production U. c. Which country has the comparative advantage in the production of capital goods? Explain. d. If Atlantis shifted from producing 10 units of capital goods and 150 units of consumer goods to producing 24 units of capital goods and 108 units of consumer goods, what would be the impact on its economic growth in the long run? e. Based on the data table, what range of capital goods could be traded for 15 units of consumer goods that would be mutually beneficial?

Answer rating: 100% (QA)

a Production Possibility Curve for Atlantis Identify the maximum production levels for capital goods and consumer goods for Atlantis from the data tab... View the full answer