Question

A. The country that should specialize in the production of jet planes is \{Alpha I Beta \} Explain why.

B. What are the boundaries on the terms of trade for autos? (i.e, for Pems) ( 2 points) g. Choose a reasonable terms of trade (trading price). Terms of trade: P anos = h. Based on the terms of trade you selected, draw the corresponding terms of trade (trading possibilities) lines in the graphs with the respective production possibiities frontiers (transformation schedules) for each country in parts (a) and (b) above. (Note: if the numeric value corresponding to the endpoints does not correspond directly with those provided, then add that information to the graph.)
C. Assume that the country that exports autos offers to trade 90,000 autos. Based on your chosen terms of trade from above, how many fet planes wil this country expect in return for trading the 90,000 autos?

Answer 1

Country Beta should specialize in the production of jet planes based on comparative advantage. The terms of trade for autos depend on various factors. The number of jet planes expected in return for trading autos depends on the specific terms of trade.

Step-by-step explanation:

The country that should specialize in the production of jet planes is Beta. This is because countries should specialize in the production of goods in which they have a comparative advantage. Comparative advantage refers to the ability of a country to produce a good at a lower opportunity cost compared to another country. By specializing in jet planes, country Beta can allocate its resources more efficiently and produce jet planes at a lower cost.

In terms of trade for autos, the boundaries refer to the range of possible exchange rates between autos and other goods. The terms of trade are influenced by supply and demand factors, production costs, and trade policies. A reasonable terms of trade would be a trading price that is mutually beneficial for both countries involved in the trade and reflects the relative value of autos in the global market.

To determine the number of jet planes that country Beta would expect in return for trading 90,000 autos, you would need to know the specific terms of trade between autos and jet planes. Without this information, it is not possible to provide an accurate answer.