Asked by
Anant Narain
on Dec 19, 2024
Verified
Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that
A) the terms of trade will be 3X equals 1Y.
B) Alpha should specialize in Y and Beta in X.
C) Alpha should specialize in X and Beta in Y.
D) there is no basis for mutually beneficial specialization and trade.
Production Possibilities
Different combinations of goods and services that an economy can produce using all its resources efficiently.
Mutually Beneficial
Actions or agreements that provide benefits to all parties involved.
Specialize
To focus on a specific area of study, work, or activity, developing expertise and efficiency in that particular area.
- Understand the fundamental principles of international trade and the concept of comparative advantage.
- Analyze how specialization and trade affect the production possibilities and economic outcomes for countries.
Verified Answer
AR
Learning Objectives
- Understand the fundamental principles of international trade and the concept of comparative advantage.
- Analyze how specialization and trade affect the production possibilities and economic outcomes for countries.