Maldonia has a comparative advantage in the production of

Efficiency in the production possibilities model Suppose Argentina produces only two goods: corn and cars. The following graph shows Argentina's current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labelled A to F. Shifts in production possibilities Suppose France produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for barley, an agricultural good, and locomotives, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of an immigration law that results in fewer workers entering the country. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. Draw ppf Opportunity cost and production possibilities Simone is a skilled toy maker who is able to produce both trains and kites. She has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of her time. Choice Hours Producing (Trains) (Kites) Produced (Trains) (Kites) A 8 0 4 0 B 6 2 3 8 C 4 4 2 14 D 2 6 1 16 E 0 8 0 17 On the following graph, use the blue points (circle symbol) to plot Simone's initial production possibilities frontier (PPF). Draw Initial PPF & New PPF Suppose Simone is currently using combination D, producing one train per day. Her opportunity cost of producing a second train per day is (1 kite or 2 kites or 14 kites or 16 kites ) per day. Now, suppose Simone is currently using combination C, producing two trains per day. Her opportunity cost of producing a third train per day is day. (1 kite or 6 kites or 8 kites or 14 kites ) per From the previous analysis, you can determine that as Simone increases her production of trains, her opportunity cost of producing one more train constant ) . ( decreases or increases or remains Suppose Simone buys a new tool that enables her to produce twice as many trains per hour as before, but it doesn't affect her ability to produce kites. Use the green points (triangle symbol) to plot her new PPF on the previous graph. Because she can now make more trains per hour, Simone's opportunity cost of producing kites is ( higher than or lower than or the same as ) it was previously. Specialization and production possibilities Suppose Bulgaria produces only trucks and cars. The resources that are used in the production of these two goods are not specialized—that is, the same set of resources is equally useful in producing both cars and trucks. The shape of Bulgaria's production possibilities frontier (PPF) should reflect the fact that as Bulgaria produces more cars and fewer trucks, the opportunity cost of producing each additional car decreases ( or increases or remains constant ) . The following graphs show two possible PPFs for Bulgaria's economy: a straight-line PPF (PPF1PPF1) and a bowed-out PPF (PPF2PPF2). Based on the previous description, the tradeoff Bulgaria faces between producing cars and trucks is best represented by (graph 1 or graph 2 ) 2. Comparative and absolute advantage Rajiv and Simone are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn (Bushels per acre) Rye (Bushels per acre) Rajiv 18 6 Simone 28 7 On the following graph, use the blue line (circle symbol) to plot Rajiv's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Simone's PPF. Draw Rajiv’s PPF & simone’s PPF (Simone or Rajiv ) has an absolute advantage in the production of corn, and simone ) has an absolute advantage in the production of rye. Rajiv's opportunity cost of producing 1 bushel of rye is bushels of corn, whereas Simone's opportunity cost of producing 1 bushel of rye is (Rajiv or bushels of corn. Because Rajiv has a Simone, (higher or lower ) opportunity cost of producing rye than (Rajiv or Simone ) has a comparative advantage in the production of rye, and (Rajiv or Simone ) has a comparative advantage in the production of corn. 3. Gains from trade Consider two neighbouring island countries called Contente and Dolorium.