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Country A currently produces 200 units of food and 500 units of textiles. Country B produces 800 units of food and 300 units of textiles.
1. Estimate the opportunity cost for each of textiles in terms of food.
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Country A |
Country B |
2. If trade were to take place, which country would produce more food
and which would produce more textiles? Explain.
3. Show the effect on Country A's PPF of a new textile manufacturing
technology.
4. Show the effect on Country B's PPF of a severe drought.