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televisions . The production possibilities frontier (PPF ),the accompanying indifference curves (U1),and the no -trade equilibrium consumption and production points for each country are as
televisions . The production possibilities frontier (PPF ),the accompanying indifference curves (U1),and the no -trade equilibrium consumption and production points for each country are as indicated below (where A and A\" represents Home and Foreign countries' no-trade consumption and production points, respectively.) The slopes of the PPF curve indicate opportunity costs or price ratios. Answer the following questions. Tv, on, (units) Car, at: (units) Tv, aw (unite) Slope = _3/2 2 a Car, 05 (units) a. which country should specialize and export TV sets ? Which country should specialize and export cars? Explain why. a. The home country should export cars because their opportunity cost per car is lower. Foreign should specialize in TVs because they have comparative advantage
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