Note: Dashed drop lines will automatically extend to both axes. Canalrnpon After Trade SUGAR (\"lions oi pounds) 2' 32 Ill GRAIN (Millions of pounds} The following graph shows the same PPF for Lamponia 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 Lamponia's consumption after trade. '1' Consurnpon After Trade 5 l: 3 a. '5 2 3 2 It 5 D ID 2' 32 Ill GRAIN (Mlllons of pounds} True or False: Without engaging in international trade, Freedonia and Lamponia 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.) 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 Lamponia. Both countries produce grain and sugar, each initially (i.e., before specialization and trade) producing 24 million pounds of grain and 12 million pounds of sugar, as indicated by the grey stars marked with the letter A. Fmdonla Lamponia 64 64 56 56 i as i 48 PPF E E 3 3 3 4|} 3 4|} *5 *5 E 32 E 32 n: 24 PF n: 24 g 16 A g 15 A a a D D D a 16 2' 32 ll} 48 56 64 D a 16 2' 32 ll} 48 56 64 GRAIN (Millions of pounds} GRAIN (Millions of pounds} Freedonia has a comparative advantage in the production of grain V , while Lamponia has a comparative advantage in the production of sugar V . Suppose that Freedonia and Lamponia specialize in the production of the goods in which each has a comparative advantage. Aer specialization, the two countries can produce a total of 48 million pounds of grain and 48 million pounds of sugar. Suppose that Freedonia and Lamponia 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 16 million pounds of grain for 16 million pounds of sugar. This ratio of goods is known as the price of trade between Freedonia and Lamponia. The foiiowing graph shows the same PPF for Freedonia as before, as we\" as its initiai consumption at point A. Place a biack point (pius symboi) on the graph to indicate Freedonia's consumption alter trade