"Consider a world economy with only two countries, Home and Foreign, producing two goods: T-shirts and phones. Producers maximize profits and consumers maximize utility (given the standard constraints, substitution of inputs such that the production possibility frontier has a round shape, bowed out from the origin). For Home and Foreign, the following is TRUE (more than one answer can be correct): A. With free trade, the small country will produce outside of its production possibilities frontier. " After watching your video i don't understand why this question's option A is false, the explanation was "No, a country cannot produce outside its PPF"
PPF captures the greatest amount of goods and services a country can possibly produce. But with specialization and TRADE, both countries, while still produce on their PPF, can trade and CONSUME outside of the PPF. Best luck.
Hi Iris Franz, I really want to thank you for what you doing!. You are really an incredible teacher. More love and respect to you from India.
You are my fav teacher
thankyou so much it's easy to understand :)
Thank you, excellent explanation.
Glad it was helpful!
You should post it on blibli
Does it matter what you put on the X and Y axis? Is there some sort of convention? Thank you for taking the time to create and upload.
It does not matter which good you put on X or Y axis! That's the beauty of economics.
Hi Iris Franz, In lesson 2, It looks a little bit blur. I can't see clearly. thanks
Is there any way to find out which country gains more from trade in this very example?
Each gains 5 bottles of ibuprofen compared to autarky. Just compare point A (A') and C (C').
@@IrisFranz thank you so much! really enjoy your content, very simply explained and has greatly increased my interest regarding economics! Much love❤️
"Consider a world economy with only two countries, Home and Foreign, producing two goods: T-shirts and phones. Producers maximize profits and consumers maximize utility (given the standard constraints, substitution of inputs such that the production possibility frontier has a round shape, bowed out from the origin). For Home and Foreign, the following is TRUE (more than one answer can be correct): A. With free trade, the small country will produce outside of its production possibilities frontier. " After watching your video i don't understand why this question's option A is false, the explanation was "No, a country cannot produce outside its PPF"
PPF captures the greatest amount of goods and services a country can possibly produce. But with specialization and TRADE, both countries, while still produce on their PPF, can trade and CONSUME outside of the PPF. Best luck.
thank you @@IrisFranz
Hi mam, your teaching is really brilliant
Can you explain how USA decided to trade 15 bottles for 10 pairs of shoes?
Terms of trade is determined by the demand and supply of both US and China. For now, these numbers are given to you.
@@IrisFranz Okay mam. Thank you so much.