(Solved): The following graphs show the production possibilities frontiers (PPFs) for Candonia and Lamponia. ...

The following graphs show the production possibilities frontiers (PPFs) for Candonia and Lamponia. Both countries produce potatoes and coffee, each initially (i.e., before specialization and trade) producing 24 million pounds of potatoes and 12 million pounds of coffee, as indicated by the grey stars marked with the letter A. Candonia has a comparative advantage in the production of , while Lamponia has a comparative advantage in the production of . Suppose that Candonia and Lamponia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of coffee and million pounds of potatoes. Suppose that Candonia and Lamponia agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 16 million pounds of potatoes for 16 million pounds of coffee. This ratio of goods is known as the price of trade between Candonia and Lamponia. The following graph shows the same PpF for Candonia as before, as well as its initial consumption at point A. Place a black point (plus symbd graph to indicate Candonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. The following graph shows the same PPF for Lamponia as before, as well as its initial consumption at point A. As you did for Candonia, place a black point (plus symbol) on the following graph to indicate Lamponia's consumption after trade.