Question

Chapter 2: Model Building and Gains from Trade Оuestlon Cоnfldence I knowI know it! e Page 36 2.2. What is a prod uction possibilities frontier? Yau can gain ar lace up ba 100 paints an this quastian. The figure shows an increase in resources that shifts the production possibilities frontier from PPF1 to PPF2. For someone producing only wings, what is the change in opportunity cost compared with producing only pizza? Actlvity Score 160 Quantity of pizzas produced PPF 120 Current Grade PPF 0% 100 Yau muct ancwer t leact 7 mare quastianc ba raceive a grede Questian Help/Challenge 300 360 Quantity of wings produced pizzas Clickor top the numbers or use your keyboord to type. If you're not sure, just tolke o guess. 1 3 4 5 6 7 8 9 Done

Answer 1

Initial opportunity cost of producing only wings = 100/300=.33

New opportunity cost of producing only wings = 120/360= 0.33

Change in opportunity cost is zero

Answer 2

Now, assume that both Sydney  and Abdullah decide to specialize, and Sydney trades 19 pizzas to Abdullah for 74 cheese steak hoagies. This outcome is shown in the last two columns of the table.

Compared with the result without trade, what are the gains from trade that Sydney experiences when she and Abdullah specialize and trade?