Chp6 - Chapter 6 CHOICES AND TRADE: INTERNATIONAL ECONOMICS...

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Chapter 6 CHOICES AND TRADE: INTERNATIONAL ECONOMICS
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6.1 THE ORIGINS OF TRADE Assumption Situation rancher can produce only meat and farmer can produce only potatoes. rancher and farmer are each capable of producing the other good, but only at great cost.
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6.2 PRODUCTION POSSIBILITIES
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1. The Production Opportunities of the Farmer and the Rancher Minutes Needed to Make 1 Ounce of Amount of Meat or Potatoes Produced in 8 hours Meat Potatoes Meat Potatoes Farmer 60 min/oz 15 min/oz 8 oz 32 oz Rancher 20 min/oz 10 min/oz 24 oz 48 oz
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2.The Production Possibilities Frontier Meat (ounce) Potatoes (ounce) 8 4 0 16 32 A Potatoes (ounce) 24 12 0 24 48 Meat (ounce) (a) Farmer’s PPF (b) Rancher’s PPF B If there is no trade, the farmer chooses this production and consumption. If there is no trade, the rancher chooses this production and consumption.
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6.3 SPECIALIZATION AND TRADE Farmer: 8h for 32 oz potatoes
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This note was uploaded on 12/06/2011 for the course BUSINESS Finance taught by Professor Qiuxin during the Summer '11 term at Nanjing University.

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Chp6 - Chapter 6 CHOICES AND TRADE: INTERNATIONAL ECONOMICS...

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