the wine and Country A should produce the cheese.The opportunity cost of cheese in Country A is 1/5 ofa bottle of wine and in Country B is 1/3 ofa bottle of wine. b. Determine the production possibilities curve for each country,both graphically and algebraically.(Label the pre-trade productionpoint PTand the post trade production point P.) For Country A their production frontier is given by 10C+50W800,or C=80-5W,and for Country B their production frontier is given by 10C+30W600,or C-60-3W.The slope of the frontier for Country A is-5 which is the price of wine divided by the price of cheese.Therefore,in Country A the price of wine is5 and in Country B the price of wine is 3.After trade,the price will settle in the middle somewhere.The post trade production point ison the terms oftrade line which hasa slopeequal to the world price ratio.say-4 in this case.Country A will produceonly cheese and Country Bwill produce only wine.Each can consume at a point on the terms of trade line that lies above and outside the production frontier. 16 Country A c Given that 36 pounds ofcheese and9 bottlesof wine are traded,label the post trade consumption point C. See the graph for Country A above.Before trade the ecountry consume and produced at point PT.which was given as 40 pounds of cheese and 8 bottles of wine.After trade,Country A will completely specialize in the the wine and Country A should produce the cheese. The opportunity cost of cheese in Country A is 1/5 of a bottle of wine and in Country B is 1/3 of a bottle of wine. b. Determine the production possibilities curve for each country, both graphically and algebraically. (Label the pre-trade production point PT and the post trade production point P.) For Country A their production frontier is given by 10C+50W=800, or C=80-5W, and for Country B their production frontier is given by 10C+30W=600, or C=60-3W. The slope of the frontier for Country A is -5 which is the price of wine divided by the price of cheese. Therefore, in Country A the price of wine is 5 and in Country B the price of wine is 3. After trade, the price will settle in the middle somewhere. The post trade production point is on the terms of trade line which has a slope equal to the world price ratio, say –4 in this case. Country A will produce only cheese and Country B will produce only wine. Each can consume at a point on the terms of trade line that lies above and outside the production frontier. C W 16 80 C P PT Country A c. Given that 36 pounds of cheese and 9 bottles of wine are traded, label the post trade consumption point C. See the graph for Country A above. Before trade the country consumed and produced at point PT, which was given as 40 pounds of cheese and 8 bottles of wine. After trade, Country A will completely specialize in the