Candonia has a comparative advantage in the production of v , while Sylvania has a comparative advantage in the production of v . Suppose that Candonia 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 grain and |:] million pounds of coffee. Suppose that Candonia 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 20 million pounds of grain for 20 million pounds of coffee. This ratio of goods is known as the price of trade between Candonia and Sylvania. Candonia has a comparative advantage in the production of , while Sylvania has a comparative advantage in the production of . Suppose that ecialize in the production of the goods in which each has a comparative advantage. After specialization, the two countri grain million pounds of grain and million pounds of coffee. coffee neither grain nor coffee Suppose that Candonia and Sylvania agree to trade. Each co Is on producing only the good in which it has a comparative advantage. The countries decide to exchange 20 million pou both grain and coffee pounds of coffee. This ratio of goods is known as the price of trade between Candonia and Sylvania.The following graph shows the same PPF for Candonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Candonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. Candonia 80 70 Consumption After Trade 60 50 COFFEE (Millions of pounds) 40 30 PPF 20 A 10 0 10 20 30 40 50 60 70 80 GRAIN (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 Candonia, place a black point (plus symbol) on the following graph to indicate Sylvania's consumption after trade. Sylvania 70 Consumption After Trade 60 50 40 30 COFFEE (Millions of pounds) 20 10 0 I I I I . . 0 10 20 30 40 50 60 70 80 GRAIN (Millions of pounds) True or False: Without engaging in international trade, Candonia and Sylvania would have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) 0 True 0 False Candonia has a comparative advantage in the production of V , while Sylvania has a comparative advantage in the production of v . Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative . ion, the two countries can produce a total of|:| million pounds of grain and million pounds of coffee. coffee Suppose that ee to trade. Each country focuses its resources on producing only the good in which it has a comparative neither grain nor coffee advantage. T ange 20 million pounds of grain for 20 million pounds of coffee. This ratio of goods is known as the price of trade betwe- both grain and coffee 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 Candonia and Sylvania. Both countries produce grain and coffee, each initially (i.e., before specialization and trade) producing 30 million pounds of grain and 15 million pounds of coffee, as indicated by the grey stars marked with the letter A. Candonia Sylvania 80 80 70 70 60 60 PPF 50 50 40 40 COFFEE (Millions of pounds) COFFEE (Millions of pounds) 30 PPP 30 20 A 20 10 10 O O 10 20 30 40 50 60 70 80 10 20 30 40 50 60 70 80 GRAIN (Millions of pounds) GRAIN (Millions of pounds)