This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: countries o Law Of Comparative Advantage – To maximize production, each nation should specialize in goods that it can produce at a lower opportunity cost relative to other nations ← ← How can one measure the opportunity cost of production using a PPF graph? • The slope of the PPF measures the opportunity cost of x ← ← Draw two PPF’s, one steeper and one flatter. Which country has the lower opportunity cost for producing the good on the horizontal axis? Use diagram to illustrate your answer. **For equal changes in x, less y is sacrificed in Economy B, thus, B has a lower opportunity cost for x. Given you answer in problem three, which country will specialize in the production of Y? 29/01/2008 18:58:00...
View Full Document
This note was uploaded on 04/07/2008 for the course ECO 112 taught by Professor Tolin during the Spring '08 term at West Chester.
- Spring '08