Assume that the United States and India enjoy constant opportunity costs in the production possibilities shown in the table.

a) Which country has an absolute advantage in pounds of peanuts?

b) Use the table to calculate the opportunity costs for each good and each country.

c) In which good with the United States specialize, and what range of terms of trade would be acceptable?

d) Draw a PPC for each country, placing pounds of peanuts on the y-axis and pecans on the x-axis.

e) Choose any acceptable terms of trade to plot and label two points on the PPC. Explain how both countries are able to consume be on their individual PPCs.

Question

sammi0825 sammi0825

09-07-2022
Advanced Placement (AP)

contestada

Assume that the United States and India enjoy constant opportunity costs in the production possibilities shown in the table.

a) Which country has an absolute advantage in pounds of peanuts?

b) Use the table to calculate the opportunity costs for each good and each country.

c) In which good with the United States specialize, and what range of terms of trade would be acceptable?

d) Draw a PPC for each country, placing pounds of peanuts on the y-axis and pecans on the x-axis.

e) Choose any acceptable terms of trade to plot and label two points on the PPC. Explain how both countries are able to consume be on their individual PPCs.

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ogorwyne ogorwyne · Answer 1 · 2022-07-11T22:00:28+02:00

The nation that has the absolute advantage in peanuts is India.

How to solve for the absolute advantage of these countries

a. The country that has the absolute advantage in the pounds of peanuts is India. They are able to produce 10 million worth of the product.

b. This is in the attachment

c. From the calculated opportunity costs, India has been shown to have the comparative advantage in peanuts so they have to specialize here.

The US on the other hand has to specialize in pecans because they have the comparative advantage in it.

d) The PPC for each country is a diagram

e. ) The terms of trade would be a pound of peanut for a pound of pec an for the countries.

Based on this the US would produce 10 units for pecans. They would use 5 units and exchange the remaining 5 units of pecans for 5 units of peanuts from India.

India is also going to do likewise.

Read more on production possibility curve here:

https://brainly.com/question/2601596

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