The production possibilities frontier is shown for a labour-abundant country. The international relative price of agricultural goods to manufactured goods is shown. The country produces at point C when open to trade.

The production possibilities frontier is shown for a labour-abundant country. The international relative price of agricultural goods to manufactured goods is shown. The country produces at point C when open to trade.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter33: International Trade

Section33.1: International Trade Theory

Problem 2ST

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Question

The production possibilities frontier is shown for a labour-abundant country. The international relative price
of agricultural goods to manufactured goods is shown. The country produces at point C when open to trade.
Manufactured
goods
M3-M2
A3-A1
M3-M1
M1
M2
A3-A2
M3
Pa/Pm
B
D
A1 A2
с
According to factor endowment theory. This country will export
A3
Agricultural goods
goods.

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