4 . Specialization and trade When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Freedonia and Sylvania. Both countries produce lemons and sugar, each initially (i.e., before specialization and trade) producing 24 million pounds of lemons and 12 million pounds of sugar, as indicated by the grey stars marked with the letter A. Freedonia Sylvania 64 64 56 56 48 PPF 48 40 40 SUGAR (Millions of pounds) 32 32 SUGAR (Millions of pounds) 24 24 PPP 16 16 , A Co Co 0 0 8 16 40 48 56 64 8 16 24 32 40 48 56 64 LEMONS (Millions of pounds) LEMONS (Millions of pounds) Freedonia has a comparative advantage in the production of , while Sylvania has a comparative advantage in the production of . Suppose that Freedonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of sugar and million pounds of lemons.Suppose that Freedonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 24 million pounds of lemons for 24 million pounds of sugar. This ratio of goods is known as the price of trade between Freedonia and Sylvania. The following graph shows the same PPF for Freedonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Freedonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. Freedonia 64 56 Consumption After Trade 48 PPF 40 SUGAR (Millions of pounds) 32 24 16 8 0 8 16 24 32 40 48 56 64 LEMONS (Millions of pounds)The following graph shows the same PPF for Sylvania as before, as well as its initial consumption at point A. As you did for Freedonia, place a black point { plus symbol) on the following graph to indicate Sylvania's consumption after trade. 6') Sylvania 84- 56 - Consumption Aer Trade 4o- 24 PF SUGAR (Millions of pounds) 16- 0 8 1B 24 32 40 48 56 64 LEMONS (Millions of pounds) True or False: Without engaging in international trade, Freedonia and Sylvania would have been able to consume at the aftertrade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.)