Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The graphs below show the production possibilities frontiers for grapes and lemons in Spain and Argentina, with their current level of production marked as points

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
The graphs below show the production possibilities frontiers for grapes and lemons in Spain and Argentina, with their current level of production marked as points A and B. Spain's Production Possibilities 13 12 11 A Grapes (millions of tons) -NWAGONODO 2.0 1.8 7.6 1.4 1.0 7.2 0.8 0.6 0.4 Lemons (millions of tons) OArgentina's Production Possibilities 6.0 5.6 5.2 4.8 4.4 4.0 3.6 3.2 B Grapes (millions of tons) 2.8 2.4 2.0 1.6 1.2 0.8 0.4 0.8 1.0 7 7 2.8 0.6 1.8 2.0 2.4 0.4 6 2.2 2.6 Lemons (millions of tons)Instructions: Round your answers to one decimal place. a. At the current level of production, combination A in Spain and combination B in Argentina, how many grapes and lemons are produced in total? 9 0 million tons of grapes 1.6 0 million tons of lemons b. Use the information above to compute the opportunity cost of producing 1 million tons of grapes in each country. For Spain, the opportunity cost of producing 1 million tons of grapes is 0.1 0 million tons of lemons. For Argentina, the opportunity cost of producing 1 million tons of grapes is 0.4 0 million tons of lemons. c. Use the information above to compute the opportunity cost of producing 1 million tons of lemons in each country. For Spain, the opportunity cost of producing 1 million tons of lemons is 10 0 million tons of grapes. For Argentina, the opportunity cost of producing 1 million tons of lemons is 2.5 0 million tons of grapes. d. With mutually beneficial trade, Spain will export grapes at a price higher than 2.5 million tons of lemons but lower than 10 @ million tons of lemons. e. With mutually beneficial trade, |Argentina will export lemons at a price higher than 0.1 million tons of grapes but lower than 0.4 @ million tons of grapes. f. As a result of international trade, the combined production of grapes and lemons between the two nations should include more grapes and more lemons

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Theory Of Moral Sentiments

Authors: Adam Smith, D D Raphael

1st Edition

0865970122, 9780865970120

More Books

Students also viewed these Economics questions