4. Refer to Table 1. We could use the information in the table to draw a product

Question

4. Refer to Table 1. We could use the information in the table to draw a production possibilities fronties for England and a second production possibilities frontier for Holland. If we were to do this, measuring milk along the horizontal axis, then a. the slope of England's production possibilities frontier would be -2 and the slope of Holland's production possibilities frontier would be-3/2 the slope of England's production possibilities frontier would be -1/2 and the slope of Holland's production possibilities frontier would be -2/3. the slope of England's production possibilities frontier would be 2 and the slope of Holland's production possibilities frontier would be 4/3. the slope of England's production possibilities frontier would be 4/10 and the slope Holland's production possibilities frontier would be 3/2. c. d. 5. If Shawn can produce donuts at a lower opportunity cost than Sue, then a. Shawn has a comparative advantage in the production of donuts. b. Sue has a comparative advantage in the production of donuts. C. d. Shawn is capable of producing more donuts than Sue in a given amount of time. 6. Trade between countries tends to a. reduce both competition and specialization. b. reduce competition and increase specialization. c. increase competition and reduce specialization. d. increase both competition and specialization.

Explanation / Answer

(4) Table 1 is required but missing.

(5) (a)

A producer has comparative advantage in that good which he/she an produce at a lower opportunity cost than another producer.

(6) (d)

Since trade expands consumer choice, trade tends to increase competition. Also, trade is based on concept of comparative advantage, so specialization increases due to trade.

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