The Only Two Countries in the World, Alpha and Omega

question 53

Essay

The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers.
Alpha's Production Possibilities Frontier

Omega's Production Possibilities Frontier
a. Assume that each country decides to use half of its resources in the production of each good. Show these points on the graphs for each country as point A. How much of each good would the countries produce?
b. If these countries choose not to trade, what would be the total world production of popcorn and peanuts?
c. Now suppose that each country decides to specialize in the good in which each has a comparative advantage. By specializing, what is the total world production of each product now?
d. If each country decides to trade 100 units of popcorn for 100 units of peanuts, show on the graphs the gain each country would receive from trade. Label these points B.

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Definitions:

Great Saphenous Vein

The Great Saphenous Vein is the longest vein in the human body, running along the length of the lower limb.

Longest Vein

The Great Saphenous Vein, which extends from the foot to the upper thigh, is the longest vein in the human body.

Inferior Vena Cava

A large vein that carries deoxygenated blood from the lower half of the body to the heart.

Superficial Vein

A vein located close to the surface of the body, often visible through the skin.