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1、InterdependenceandtheGainsfromTrade1©2011CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword-protectedwebsiteforclassroomuse.AP
2、arablefortheModernEconomyOnlytwogoodsMeatPotatoesOnlytwopeopleRancherFarmer2©2011CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapas
3、sword-protectedwebsiteforclassroomuse.AParablefortheModernEconomyIfrancherproducesonlymeatAndfarmerproducesonlypotatoesBothgainfromtradeIfbothrancherandfarmerproducebothmeatandpotatoesBothgainfromspecializationandtradeProductionpossibilitiesfrontierVarious
4、mixesofoutputthataneconomycanproduce3©2011CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword-protectedwebsiteforclassroomuse.F
5、igure14©2011CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword-protectedwebsiteforclassroomuse.TheProductionPossibilitiesFront
6、ier(a)Panel(a)showstheproductionopportunitiesavailabletothefarmerandtherancher.Figure15©2011CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorothe
7、rwiseonapassword-protectedwebsiteforclassroomuse.TheProductionPossibilitiesFrontier(b,c)Panel(b)showsthecombinationsofmeatandpotatoesthatthefarmercanproduce.Panel(c)showsthecombinationsofmeatandpotatoesthattheranchercanproduce.Bothproductionpossibilitiesfr
8、ontiersarederivedassumingthatthefarmerandranchereachwork8hoursperday.Ifthereisnotrade,eachperson’sproductionpossibilitiesfrontierisalsohisorherconsumptionpossibilitiesfrontier.(b)Thefarmer’sproductionpossibil