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Visualizing the factor-endowment theory Consider the two hypothetical nations of Grork and Fireton. Suppose they both produce only two goods, electric dog collars and catnip toys. Each country faces

Visualizing the factor-endowment theory Consider the two hypothetical nations of Grork and Fireton. Suppose they both produce only two goods, electric dog collars and catnip toys. Each country faces a trade-off when producing the two goods. The following graph displays the respective production possibilities frontiers (PPF) for Grork and Fireton. A-Z 50 45 Gror's PPF 40 + Toms of Trade . 35 30 CATNIP TOYS (Thousands) 25 a X 20 Firen's PPF 16 * 10 X1 10 1 20 12 30 40
Homework (Ch 03) If the two nations operate in autarky, which of the black points (plus symbol) are attainable for Grork? Check all that apply. X Point A Point B Point Point D Suppose the two nations decide to trade with each other at a rate of one electric dog collar per catnip toy (1:1) ad On the previous graph, use the green line (triangle symbol) to represent the terms of trade to help you find your answer to the following question. You will not be graded on where you place the line on the graph, Which of the grey points (star symbol) that were not attainable by either country in autarky are attainable once the countries agree to trade, holding all else constant? Check all that apply. Point W Point X Point Y Point z Suppose Fireton and Grork engage in trade, and both nations desire the same post-trade consumption bundle. (Note: Assume both countries will not waste any resources.)
Suppose Fireton and Grork engage in trade, and both nations desire the same post-trade consumption bundle. (Note: Assume both countries will not waste any resources.) Fireton will catnip toys.

Apr 12 2021 View more View Less

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