1. Business
  2. Economics
  3. food food a y x 200 y200 x6667 y100 dles...

Question: food food a y x 200 y200 x6667 y100 dles...

Question details

Food Food A (Y) X 200 Y-200 X-6667 Y=100 dles Oil(x) United States United States Canada S. The production possibility frontiers of two counties are represented on the graphs above. The production possibility frontiers are represented as straight lines. Let Good X be units of oil and Good Y be units of food. The United States is currently producing and consuming the goods combination represented by Point A. Canada is currently producing and consuming the goods combination represented by Point B. a. Does either country have an absolute advantage in production? Explain. b. Which country has a comparative advantage in the production of oil (Good x)? Which has a comparative advantage in the production of food (Good Y)? Explain and show your work. Would the two countries find it mutually beneficial if the United States were to trade 25 units of oil (good X) to Canada in return for Canada sending 50 units of food (good Y) to the United States? Explain. c.
Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution