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3 . Specialization and trade A country may specialize in producing a good that it can produce at a lower opportunity cost than its trading

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3 . Specialization and trade A country may specialize in producing a good that it can produce at a lower opportunity cost than its trading partners. Because of this comparative advantage, countries benefit when they specialize and trade with each other. The following graphs show the production possibilities curves (PPCs) for Maldonia and Desonia. Both countries produce grain and coffee, each initially (that is, before specialization and trade) producing 24 million kilograms of grain and 12 million kilograms of coffee, as indicated by the grey stars marked with the letter A. (? ) (? ) Maldonia Desonia 84 64 56 COFFEE (Millions of kilograms) PPC 48 40 COFFEE (Millions of kilograms) 40 32 32 24 24 PPC A 16 ca 18 24 32 40 48 56 64 16 24 32 40 48 56 64 GRAIN (Millions of kilograms) GRAIN (Millions of kilograms)The following graph shows the same PPC for Maldonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Maldonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. (? Maldonia 64 58 Consumption After Trade COFFEE (Millions of kilograms) 48 PPC 40 32 24 16 A 16 24 32 40 48 56 64 GRAIN (Millions of kilograms) The following graph shows the same PPC for Desonia as before, as well as its initial consumption at point A.As you did for Maldonia, place a black point (plus symbol) on the following graph to indicate Desonia's consumption after trade. (?) Desonia 64 Consumption After Trade COFFEE (Millions of kilograms) 40 32 24 PPC A 18 24 32 40 48 56 64 GRAIN (Millions of kilograms) True or False: Without engaging in international trade, Maldonia and Desonia would not have been able to consume at the after-trade consumption bundles. (Hint: In answering this question, you may wish to refer to your previous answers.) O True O False

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