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Use the production possibilities below to answer this question Landia Fish Chips ABCDE 86420 012243648 Scandia Fish Chips ABCDE 1612840 012243648 Draw domestic production possibilities
- Use the production possibilities below to answer this question
Landia
Fish
Chips
ABCDE
86420
012243648
Scandia
Fish
Chips
ABCDE
1612840
012243648
- Draw domestic production possibilities for Landia and Scandia (hint: these are linear tradeoffs).
- Suppose each country specializes in its comparative advantage, and the terms of trade are 1 fish for 6 chips. Can Landia and Scandia both achieve a level of consumption outside of their production possibilities? Use the graphs from Part a to explain your answer.
- Suppose in autarky (i.e. as a self-sufficient economy) both Landia and Scandia produce at point C on their respective production possibilities functions. Based on your answer to Part b, how much has total consumption increased for both Landia and Scandia?
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Energy, Foresight And Strategy
Authors: Thomas J Sargent
1st Edition
1317329686, 9781317329688
