22. Refer to the above tables. In Latalia the domestic real cost of 1 ton of por

Question

22. Refer to the above tables. In Latalia the domestic real cost of 1 ton of pork:
A. is 3 tons of beans.
B. diminishes with the level of pork production.
C. is 5 tons of beans.
D. is 1/5of a ton of beans.

24. Refer to the above tables. Assume that before specialization and trade, Latalia produced combination C and Trombonia produced combination B. If these two nations now specialize completely based on comparative advantage, the total gains from specialization and trade will be:
A. 4 tons of beans.
B. 1 ton of pork and 2 tons of beans.
C. 4 tons of pork.
D. 2 tons of pork and 4 tons of beans.

25. Refer to the above tables. Which of the following would be feasible terms for trade between Latalia and Trombonia?

A. 1 ton of beans for 1 ton of pork
B. 2 tons of beans for 1 ton of pork
C. 6 tons of beans for 1 ton of pork
D. 4 tons of beans for 1 ton of pork

can someone explain how they got those answers thank you!

Latalia's Production Possibilities A B C D E Pork (Tons) 4 3 2 1 0 Beans(Tons) 0 5 10 15 20 Trombonla's Production Possibilities A B C D E Pork(Tons) 8 6 4 2 0 Beans(Tons) 0 6 12 18 24

Explanation / Answer

22. As you can see from the chart to get an additional ton of pork (go, say, from 3 to 4), L has to give up 5 tons of beans (go from 5 to 0). Thus the cost of one ton of pork is 5 tons of beans.

23. If both countries specialize L will produce 20 beans and T will produce 8 pork. Now the countries combined production has gone from 8 pork and 16 beans to 8 pork and 20 beans, a gain of 4 beans.

24. Since the cost of 1 pork in L is 5 beans and in P it is 3 beans it makes sense that the terms of trade will be somewhere in between those costs so both countries benefit. So 4 tons of beans for 1 ton of pork makes sense.

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