Chapter 3 - Chapter 3 Interdependence and the Gains from...

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Chapter Interdependence and the Gains from Trade 3
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A Parable for the Modern 22
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Figure The production possibilities 33 (a) Production Opportunities Minutes needed to Make 1 ounce of: Amount produced in 8 hours Meat Potatoe s Meat Potatoe s Farmer Ranche r 60 min/ oz 20 min/ oz 15 min/ oz 10 min/ oz 8 oz 24 oz 32 oz 48 oz Panel (a) shows the production opportunities available to the farmer and the rancher.
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Figure The production possibilities 44 (b) The farmer’s production possibilities frontier Panel (b) shows the combinations of meat and potatoes that the farmer can produce. Panel (c) shows the combinations of meat and potatoes that the rancher can produce. Both production possibilities frontiers are derived assuming that the farmer and rancher each work 8 hours per day. If there is no trade, each person’s production possibilities frontier (c) The rancher’s production possibilities frontier M ea t (o z) 0 4 8 Potatoes (oz) 1 6 3 2 A If there is no trade, the farmer chooses this production and
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Chapter 3 - Chapter 3 Interdependence and the Gains from...

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