Question
5.Table 1 shows the maximum output of X and Y that Kenya and Nigeria can produce under constant cost conditions. a.Graph the production possibilities frontiers
5.Table 1 shows the maximum output of X and Y that Kenya and Nigeria can produce under constant cost conditions.
a.Graph the production possibilities frontiers for Kenya and Nigeria in the absence of trade, assume that the Kenya produces and consumes 18000 X and 2000 Y and that Nigeria produces and consumes 8000 X and 1000 Y. Denote this points on each country's production possibilities frontiers.
b.According to the theory of comparative advantage i) Determine the marginal rate of transformation for each country.
ii) Kenya should specialize in the production of which product?
iii) How much the production in Nigeria increase?.
Kenya | Nigeria | |
X | 30,000 | 12000 |
Y | 5000 | 3000 |
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