The Only Two Countries in the World,Alpha and Omega,face the Following

question 372

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.
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:

Id

In psychoanalytic theory, the part of the mind that acts as the source of instinctual impulses and demands for immediate satisfaction of primitive needs.

Primitive

Denotes something that is basic or unsophisticated in terms of development or technology, often implying an early stage of evolutionary or historical development.

Instinctive Component

An innate part of behavior that arises from within and is driven by evolutionary pressures, without the need for conscious thought.

Personality

A mix of features and qualities that define an individual's specific character.