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Suppose there exist two imaginary countries, Everglades and Denali. Their labor forces are each capable of supplying four million hours per week that can be used to produce chinos, pistachios, or some combination of the two. The following table shows the amount of chinos or pistachios that can be produced by one hour of labor. produces 15 million pairs of chinos and 20 million pounds of pistachios, and Denali produces 8 million pairs of chinos and 48 million pounds of pistachios. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of chinos and pistachios it produces. Everglades's opportunity cost of producing 1 pair of chinos is of pistachios, and Denali's opportunity cost of producing 1 pair of chinos is of pistachios. Therefore, has a comparative advantage in the production of chinos, and has a comparative advantage in the production of pistachios.
Suppose there exist two imaginary countries, Everglades and Denali. Their labor forces are each capable of supplying four million hours per week that can be used to produce chinos, pistachios, or some combination of the two. The following table shows the amount of chinos or pistachios that can be produced by one hour of labor. produces 15 million pairs of chinos and 20 million pounds of pistachios, and Denali produces 8 million pairs of chinos and 48 million pounds of pistachios. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of chinos and pistachios it produces. Everglades's opportunity cost of producing 1 pair of chinos is of pistachios, and Denali's opportunity cost of producing 1 pair of chinos is of pistachios. Therefore, has a comparative advantage in the production of chinos, and has a comparative advantage in the production of pistachios.
Final answer:The question relates to the economic principle of comparative advantage. It illustrates how the two imaginary countries, Everglades and Denali, should specialize inproducing goods(chinos or pistachios) that they can produce at a lower opportunity cost and then trade with each other to gain more of both goods.Explanation:The given situation is exploring the concept of comparative advantage in the field of international trade. In this case, we have two imaginary economies Everglades and Denali where each can produce either chinos or pistachios.The opportunity cost of producing chinos in terms of pistachios for each country denotes how many pounds of pistachio must be given up to produce one pair of chinos. The opportunity cost is lower for the country that sacrifices less of the other good to produce chinos. This same country then has acomparative advantagein the production of chinos.Similarly, the country with the lower opportunity cost (meaning it sacrifices less of chino for producing pistachios) has a comparative advantage in producing pistachios. By specializing according to their comparative advantage and trading, both countries can enjoy more of both goods than they would in the absence of trade.Learn more about Comparative Advantage here:brainly.com/question/7780461#SPJ1...