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Please show the consumption after trade as well and indicate the point. And fill in the blanks. Thank you. The following graph shows the production
Please show the consumption after trade as well and indicate the point. And fill in the blanks. Thank you.
The following graph shows the production possibilities frontier for the imaginary country of Bellissima under conditions of increasing oosts. In the absence of trade, the relative cost of wheat in Bellissima in terms of tablets (or the marginal rate of transformation (MRT) of wheat into tablets) is shown by the slope of line t1 , tangent to the production possibilities frontier at point A. CD 300 '9 270 240 Consumption After Trade 210 WHEAT (Bushels) Q E to c an o 30 I I I I I I 5 1o 12 14 16 15 20 TABLETS I I I I I I I I I : a which of the following most accurately describes Bellissima's economy in the absence of trade? Bellissima produces 234 bushels of wheat but consumes only 180 bushels of wheat. Bellissima produces and consumes 6 tablets and 180 bushels of wheat. Bellissima produces and consumes 6 tablets and 234 bushels of wheat. Bellissima consumes 6 tablets and 234 bushels of wheat. Bellissima produces 6 tablets and 234 bushels of wheat. At point A, the slope of line :1 reveals that Bellissima must forego bushels of wheat in order to produce 1 tablet. (Hint: Select a line to see its slope.) Suppose that Bellissima recognizes that it has a comparative advantage in the production of tablets. Bellissima decides to specialize in making tablets and enters international trade. The international terms of trade (the price of wheat in terms of tablets) are shown by the slope of the line 12 , tangent to the production possibilities frontier at point B. The slope of :2 reveals that now Bellissima foregoes bushels of wheat in order to produce 1 tablet. This means that the absolute value of the production possibilities frontier's slope v . Assume that Bellissima chooses to consume the same number of tablets as it did in the absence of trade. On the previous graph, use the purple point (diamond symbol) to indicate Bellissima's consumption after trade. According to the graph, Bellissima's production gain from specialization is V , and its consumption gain from trade is vStep by Step Solution
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