Question

What is mean illustrate a treadeoff

Answer 1

This is the graphical or example oriented representation of production possibility curve of two choices. It is required to see which choice has comparative advantage in producing and distributing goods based on their opportunity costs – the choice having lower opportunity cost should lead for comparative advantage and should go for export with the other choice. (Trade off means the business of import and export.)

Example:

Table of production and opportunity cost (OC)

Countries	Banana		Car
	Qty	OC	Qty	OC
S1	40	35/40 = 0.875	35	40/35 = 1.14
P2	20	30/20 = 1.5	30	20/30 = 0.67

Based on the data above, S1 should export banana (since its OC 0.875 is lower than 1.5) to S2. P2 should export car (since it OC 0.67 is lower than 1.14) to S2.