Q Question 1 4 / 4 pts The production possibilities curve below shows the hypothetical relationship between the production of guns (national defense) and butter (social goods) in an economy. Combination Guns Butter A 0 4 B 14 3 C 26 2 D 36 1 E 44 0 Your response should be a number ONLY. 1. What is the marginal opportunity cost of producing the second unit of butter? 2. What is the total opportunity cost of producing the second unit of butter? 3. What is the marginal opportunity cost of producing the third unit of butter? 4. What is the total opportunity cost of producing the third unit of butter? Question 2 5 / 5 pts Assume that the United States and China each produce steel and toys. The following are the production possibility schedules for each nation. Answer the questions below based on the PPF schedules. China A B C D E Steel 8 6 4 2 0 Toys 0 10 20 30 40 United States A B C D E Steel 16 12 8 4 0 Toys 0 12 24 36 48 1. Which country has absolute advantage in the production of steel? 2. Which country has absolute advantage in the production of toys? 3. Which country has comparative advantage in the production of toys? 4. Which country has comparative advantage in the production of steel? 5. If the two countries specialize and trade with each other, which country will import steel?

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