ECON 2306 9 Trade

Sothe opportunitycostfor20hutsis60radios

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: month 60 0 15 15 0 20 ­Notice GI (Gilligan’s Island) can produce either 60 huts a month or 20 radios a month. So the opportunity cost for 60 huts is 20 radios. ­Reducing this number, 60 huts/20 radios = 3 huts/1 radio. ­Suppose GI is currently making and consuming 15 huts and 15 radios. 17 17 Trade Suppose the Production Possibilities Table for the Swiss Family Robinson is as follows: Number of Huts built in Number of Radios built a month in a month 20 0 15 15 0 60 ­Notice SFR can produce either 20 huts a month or 60 radios a month. So the opportunity cost for 20 huts is 60 radios. ­Reducing this number, 20 huts/60 radios = 1 huts/3 radio. ­Suppose SFR is currently making and consuming 15 huts and 15 radios. 18 18 Trade Thus the two PPFs are as follows: Huts 60 GI PPF 20 SFR PPF 20 60 Radios 19 19 Trade – Recall currently GI and SFR are producing (and consuming) 15 huts and 15 radios. – The total economy thus has 30 huts and 30 radios 20 20 Trade Comparative Advantage – The advantage in the production of a product enjoyed by one country o...
View Full Document

Ask a homework question - tutors are online