. Country A and Country B produce the same two products, hammocks and looms. Country A
can produce a maximum of 60 hammocks or 40
looms, while Country B can produce a
maximum of 40 hammocks or 20 looms.
(a) What is the opportunity cost to produce a loom
in terms of hammocks in Country A?
(b) Which country has a comparative advantage in
producing looms? Explain.
(c) Internationally, if 1 loom is traded for 1.75
hammocks, who will benefit from trading:
Country A only, Country B only, both
countries, or neither country?
(d) Assume there is international trade.
(i) Can a country produce beyond its
production possibilities curve (PPC)?
(ii) Can a country consume beyond its PPC?

1. the corporate form of business organization has an advantage over both the sole proprietorship and the general partnership in ease of 2. the corporate form of business organization has an advantage over both the sole proprietorship and the general partnership in external liability for business 3. a partnership is an association of two or more persons to carry on as co-owners a business for 4. any one partner may be held liable for the entire indebtedness of the 5. a limited partner is liable for the partnership debt only to the extent of her capital 6. a person may be a partner even though he has no authority to conduct the ordinary activities of the 7. a partner may withdraw his capital contribution without the consent of all the 8. when a partner sells his interest in the partnership, the buyer becomes a new 9.every partner owes a duty of good faith, fairness, and loyalty to the other 10. a partner who fails to use ordinary care and skill in discharging assigned duties will be personally liable to the partners for any resulting loss.