What is the opportunity cost of producing each good

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Reference no: EM13981914

Argentina and New Zealand each produce wheat and mutton under conditions of perfect competition, as shown on the accompanying production possibilities curves. Assume that there is no trade between the two countries and that Argentina is now producing at point A and New Zealand at point C.

a. What is the opportunity cost of producing each good in Argentina?

b. What is the opportunity cost of producing each good in New Zealand?

c. Which country has a comparative advantage in which good? Explain.

d. Explain how international trade would affect wheat production in Argentina.

e. How would international trade affect mutton production? f.Explain how international trade would affect wheat production in New Zealand. How would it affect mutton production?

g. How would trade between the two countries affect consumption of wheat and mutton in each country?

Reference no: EM13981914

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