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wine SERE54321 90 80 70 60 50 40 30 20 10 PPF Portugal CPF 0 0 10 20 30 40 50 60 cloth wine 90 8888888 80 70 60 50 40 → 30 20 10 England PPF CPF 0. 0 10 20 30 40 50 60 cloth

wine SERE54321 90 80 70 60 50 40 30 20 10 PPF Portugal CPF 0 0 10 20 30 40 50 60 cloth wine 90 8888888 80 70 60 50 40 → 30 20 10 England PPF CPF 0. 0 10 20 30 40 50 60 cloth

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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According to the above set of production possibilities and consumption (trade) possibilities frontiers, what will happen to production and relative prices once trade is opened between these two countries?

   

a) Production of cloth in Portugal will fall to zero, while the price of wine will fall to ½ yd/bottle.
   

b) Production of cloth in England will fall to zero, while the price of wine will increase to ½ yd/bottle.
   

c) Production of wine in Portugal will increase to 90, while the price of cloth will fall to 2 yd/bottle.
   

d) Production of wine in England will increase to 60, while the price of cloth will fall to 3 bottles/yd.
wine 90 8888 80 70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 cloth n Portugal PPF CPF wine England 90 80 70 60 50 40 30 ➡ 20 10 0 0 10 20 30 40 50 60 cloth → PPF CPF
Transcribed Image Text:wine 90 8888 80 70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 cloth n Portugal PPF CPF wine England 90 80 70 60 50 40 30 ➡ 20 10 0 0 10 20 30 40 50 60 cloth → PPF CPF
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