The following table shows how many tonnes of dairy products and beef products can be produced in

Question:

The following table shows how many tonnes of dairy products and beef products can be produced in New Zealand and Australia with one unit of equivalent resources.

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a. Which country has an absolute advantage in dairy products? In beef products? Explain.

b. What is the opportunity cost of producing an extra tonne of dairy products in New Zealand? In Australia? What is the opportunity cost of producing an extra tonne of beef products in New Zealand? In Australia?

c. What is the pattern of comparative advantage between these two countries?

d. Assume that both countries have 100 units of equivalent resources. On a scale diagram with beef products on the horizontal axis and dairy products on the vertical axis, draw each country's production possibilities boundary.

e. What is the interpretation of the slope of the production possibilities boundary?

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Related Book For  book-img-for-question

Macroeconomics

ISBN: 9780133910445

15th Edition

Authors: Christopher T S Ragan

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