When a country specializes in the production of a good, this means that it can p

Question

When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Sylvania. Both countries produce potatoes and tea, each initially (i.e., before specialization and trade) producing 24 million pounds of potatoes and 12 million pounds of tea, as indicated by the grey stars marked with the letter A. Maldonia Sylvania 64 64 56 48 40 32 48 PPF 40 32 16 0 8 16 24 32 40 48 56 64 POTATOES (Millions of pounds) 0 8 16 24 32 40 48 56 64 POTATOES (Millions of pounds) Maldonia has a comparative advantage in the production of production of comparative advantage. After specialization, the two co of potatoes while Sylvania has a comparative advantage in the lize in the production of the goods in which each has a . Suppose that potatoes million pounds of tea and million pounds tea

Explanation / Answer

Tea
Potatoes
48
48

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