The graphs below show the production possibilities frontiers for apples and peac
ID: 1225346 • Letter: T
Question
The graphs below show the production possibilities frontiers for apples and peaches in Italy and Turkey.
a. At the current level of production, combination A in Italy and combination B in Turkey, how many apples and peaches are produced in total?
______ million tons of apples
______ million tons of peaches
b. If each nation specializes based on its comparative advantage, how many apples and peaches does each country produce?
Italy produces ______ million tons of apples and
________ million tons of peaches.
Turkey produces _____ million tons of apples and _____ million tons of peaches.
c. If each nation specializes based on its comparative advantage, how many apples and peaches are produced in total?
______ million tons of apples ______ million tons of peaches
d. Comparing your answers to part a with part c, specialization will lead to:
more apples and less peaches being produced. more apples and more peaches being produced. less apples and more peaches being produced. less apples and less peaches being produced he graphs below show the production possibilities frontiers for apples and peaches in Italy and Turke Italy's Production Possibilitie:s 4.0 3.8 3.6 3.4 3.2 un 3.0 O 2.8 2.6 O 2.4 24 C 2.2 O 2.0 1.8 1.4 1.2 1.0 0.8 0.4 00 04 08 12 1620 34 56 0.4 1.2 2.0 2.83.64.4 5.2 3.2 4.0 Peaches (millions of tons)Explanation / Answer
a) At the current level of production, combination A in Italy and combination B in Turkey, a total of 5 million tons of apples and 2.2 million tons of peaches are produced in total.
b) A nation said to have comparative advantage when it is possible for it produce a particular product at a lower (opportunity) cost than another country. In this case, the opportunity cost of producing one extra ton of Apples being 0.75 peaches in Italy and 4.33 peaches in Turkey so Italy has comparative advantage in producing Apples and Turkey has comparative advantage in producing peaches. If each nation specializes based on its comparative advantage, Italy produces 0 million tons of apples and 4.8 million tons of peaches. Similarly, Turkey produces 5.2 million tons of apples and 0 million tons of peaches. Hence, Italy will be producing only Apples and Turkey will be producing only peaches.
c. If each nation specializes based on its comparative advantage, 5.2 million tons of apples and 4.2 million tons of peaches are produced in total
d. Comparing your answers to part a with part c, specialization will lead to more apples and more peaches being produced. A country can benefit from specialization when it is possible for it produce a particular product at a lower (opportunity) cost than another country. At this point, both countries produce what the best they can produce at the most efficient level so that the total production apples rises from 5 million tons to 5.2 milllion tons and peaches from 2.2 million ton to 4.8 million ton.
Hence option B is correct.
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