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Question: the nations of arboc and arbez each produce sweaters s...

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The nations of Arboc and Arbez each produce sweaters (S) and potatoes (P). The production possibility frontier (ppf) for Arboc is described by the equation S- 60 -2P. The production possibility frontier for Arbez is described by the equation S - 60-4P 1. Situation A: Arboc is producing 20 sweaters and 15 potatoes. unity cost of 10 extra sweaters._ 10 extra units of potatoes. 2. Situation B: Arboc is producing 40 sweaters and 10 units of potatoes. Calculate the opportunity cost of 10 extra sweaters. 10 extra units of potatoes,- 3. Explain why you find a different set of answers in Situation A and Situation B. 4 Along the Arbocali ppf, what is the cost of each sweater? 5. Along the Arbezani ppf, what is the cost of each sweater? 6. Sweaters are relatively cheaper to produce in units of potatoes units of potatoes ARBOC I ARBEZ ARBOC / ARBEZ Potatoes are relatively cheaper to produce in The two countries confer and decide that each should specialize in the production of one of the two oods and then export, according to the Law of Comparative Advantage. should Based on cost, and assuming full employment of resources, which Arboc export? SWEATERS/ POTATOES Now assume Arboc becomes more efficient and can double its output of both sweaters and potatoes. 8. Which good should Arboc export now? SWEATERS/ POTATOES 9/10. Explain your answer to question 8
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