5. Suppose there are two countries, Busytown and Lazyasiwannabe, with the following production possibility tables:

a. Draw the production possibility curves for each country.

b. Which country has the comparative advantage in producing cars? In producing gourmet meals?

c. Suppose each country specializes in the production of one good. Explain how Busytown can end up with 36,000 cars and 22,000 meals and Lazyasiwannabe can end up with 28,000 meals and 24,000 cars.

Transcribed Image Text:

CarsProduced to Cars (thousands) 100% % of Resources Devoted Busytown 60 Gourmet Meals Produced (thousands) 0 80 48 10 60 36 20 40 24 30 20 12 40 0 0 50 to Cars 100% % of Resources Devoted Lazyasiwannabe Cars Produced (thousands) 50 Gourmet Meals Produced (thousands) 0 80 40 10 60 30 20 40 20 30 20 10 40 0 0 50