Question
We can imagine two countries that make two different things, just like Amy and Benny. For example, countries can make new medicines, which is an
We can imagine two countries that make two different things, just like Amy and Benny. For example, countries can make new medicines, which is an industry we call pharmaceuticals, or they can make casual fashion, like H&M. Germany has a huge pharmaceutical industry. Bangladesh has a huge clothing production industry. Let's assume Germany has a comparative advantage in pharma and Bangladesh has a comparative advantage in clothing. Let's also assume that Germany has an absolute advantage in both. Draw one graph that represent the PPF for pharma and clothing in both countries. Put clothing on the Y axis and pharma on the X axis. Assume the PPFs are straight lines.
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