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.
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.
Definitions:
Capital Budgeting
The process of making investment decisions in long-term assets and projects.
Analyzing
The process of examining data or information to understand and interpret patterns, trends, or relationships.
Factory Overhead
The indirect costs associated with manufacturing, which include expenses such as utilities, maintenance, and depreciation of equipment.
Depreciation
The process of allocating the cost of a tangible asset over its useful life.
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