Answer to Question #123891 in Microeconomics for lili

Question

Consider the following information for the countries of Poland and Germany. Answer and provide basic arithmetical operations to support each one of your choices.

Luxury cars (units per month) Potatoes (tons per month)

Germany 210 000 21000
Poland 50 000 15000

Given equal number of workers and constant productivity, here is a table describing the maximum possible production of potatoes and luxury cars of both countries.

Draw the PPF for each country in the same plot.
Which country will specialize on making luxury vehicles?
Which country will specialize on making potatoes?
Stablish the fair price bracket limits (terms of trade) for luxury vehicles in terms of tons of potatoes.

Answer 1

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