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Question

Alpha and Beta, two tiny islands off the east coast of Tricoli, produce pearls and pineapples. The

production-possibilities schedules in the table below describe their potential output in tons per year.

(a) What is the opportunity cost of pearls on each island (before trade)?

(b) Which island has a comparative advantage in pineapple production? Please explain your answer


Ch. 17.jpg

Ch. 17.jpg

Top Answer

A: BEFORE TRADE: Alpha: Opportunity Cost= 12/30=0.4 the opportunity cost of pearl per pineapple in alpha is 0.4 Beta:... View the full answer

Screen Shot 2020-02-11 at 4.44.10 PM.png

Figure-1 shows the production possibility of alpha:
35
Figure - 1
30
Quantity of Pineapple
25
20
15
10
UI
0
5
10
15
Quantity of Pearl
From Figure-1, x-axis shows the quantity of pearls, and y-axis...

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