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Taiwan can produce 20million netbooks, whereas Brazil can produce 10 million netbooks. Similarly,Taiwan can produce 30 million bags of coffee while Brazil can produce 50
Taiwan can produce 20million netbooks, whereas Brazil can produce 10 million netbooks. Similarly,Taiwan can produce 30 million bags of coffee while Brazil can produce 50 million bags. a) Draw the production possibilities curve for each country. b) who has the absolute advantage in each good? c) what is opportunity cost for each country for netbooks? d) what is the opportunity cost for each country for coffee? e) Assume that both countries are splitting their resources equally between coffee and netbooks. How many netbooks and bags of coffee would each country produce? How many netbooks and bags of coffee would be produced in total? F) Now assure each country specialized in the good for which they have the comparative advantage. They agreed to trade half of what they produce to each other. Would each country agree to this agreement? What would happen to the amount of coffee and netbooks each country would be able to consume
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