Question

Country Country ces Cameras Apples Cameras Apples 120 180 100 150 250 0 0 300 The table above is a production possibilities schedule for countries X and Y The opportunity cost of producing one unit of applos in country X is Select units of cameras The opportunity cost of producing one unit of apples in country Y is Select] units of cameras Select] Country X has a comparative advantage in the production of Country Y has a comparative advantage in the production of Select) Suppose that before countries X and Y decide to trade, country X produces 60 units of cameras and 120 units of apples Country Y produces 120 units of cameras and 100 units of apples If counties X and Y decide to specialize and trade, this would result in an increase in total units and an increase in the production of cameras in the amount of Select

Answer 1

The opportunity cost of producing one unit of apple in country X is 120/240= 0.5 unit of cameras.

The opportunity cost of producing on each unit of Apple in county Y is 180/300 = 0.6 units of cameras.

Because Country X has a lower opportunity cost in the production of apples ,therefore Country has a comparative advantage in the production of Apples.

And Country Y has a comparative advantage in the production of Cameras.

So, after trade  Country X would only produce Apples and Country would only produce Cameras .

This means after Trade : Total production of apples = 240 and Total production of cameras = 180.

Before trade : Country X produces 60 units of cameras and 120 units of apples . And Country Y produces 120 units of cameras and 100 units of apples.

This means before trade :Total production of apples = (120+100) = 220 apples and total production of cameras = (60+120) = 180 cameras .

If countries X and Y decide to trade , this would result in an increase in total production of cameras in the amount  of (180-180)= 0 units and an increase in the total production of apples in the amount of (240-220)= 20 units.