What effect has globalization had on the ability of firms to specialize? How has this affected the competitive process?
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It is possible that there will be development in areas of production/services that will allow U.S. wages to remain high, but in all likelihood either U.S. nominal wages will grow slowly and foreign nominal wages will grow rapidly and catch up or U.S. exchange rates will decline to equalize wages. Some combination of the two is most likely.
A) In two hours JustBorn Candies can produce 30,000 Peeps or 90,000 Mike and Ikes or any combination in between. What is the trade-off between Peeps and Mike and Ikes?

B) Draw a production possibility curve that reflects this trade-off.

C) Identify the placement of the following points on the production possibility curve:
1) An efficient production point is
2) An inefficient production point is
3) An impossible point is

D) Illustrate what would happen if JustBorn candies developed a technology that increased productivity by one third for both products.
A country has the following production possibility table:

1) Draw the country's production possibility curve.

2) What's happening to the trade-off between food and clothing?

3) Assume the country gets better at the production of food. What will happen to the production possibility curve?

4) Assume the country gets equally better at producing both food and clothing. What will happen to the production possibility curve?