Suppose that Candonia and Sylvania agree to trade. Each country locuses its resources on producing only the good in which it has a cornparative advantage Candonia has a comperative advantage in the production of tea: The countries decide to exchange 4 million pounds of lemons for 4 miltion pounids of tea. This ratio of goods is known as the terms of trade between Candonia and Sylvania The following araph shows the PPF for Candoria, as weil as is iential consurpption at point A Piace a black point (cross symbol) on the graph to indicate Candonias consumption after brade. Note Dashed diop lines will automatically extend to both axes. After trade, Candonia consumes million pounds of lemons as well as milition pounds of tea. .

1. Suppose that Candonia and Sylvania agree to trade. Each country locuses its resources on
producing only the good in which it has a cornparative advantage Candonia has a comperative
advantage in the production of tea: The countries decide to exchange 4 million pounds of lemons
for 4 miltion pounids of tea. This ratio of goods is known as the terms of trade between Candonia
and Sylvania The following araph shows the PPF for Candoria, as weil as is iential consurpption
at point A Piace a black point (cross symbol) on the graph to indicate Candonias consumption
after brade. Note Dashed diop lines will automatically extend to both axes. After trade, Candonia
consumes million pounds of lemons as well as milition pounds of tea.