Question
3. Assume that the people of Phobos and Deimos (the moons of Mars) use equal resources to produce consumer and capital goods, as illustrated in
3. Assume that the people of Phobos and Deimos (the moons of Mars) use equal resources to produce consumer and capital goods, as illustrated in the table below showing maximum possible production figures. (5 points)
Country | Capital Goods | Consumer Goods |
---|---|---|
Phobos | 20 units | 120 units |
Deimos | 60 units | 120 units |
Which country has the comparative advantage in the production of capital goods? Explain.
If Deimos shifted from producing 50 units of capital goods and 20 units of consumer goods to producing 35 units of capital goods and 50 units of consumer goods, what would be the impact on its economic growth in the long run?
Based on the data table, what range of consumer goods could be traded for 10 units of capital goods that would be mutually beneficial?
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