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:
Inductive Reactance
The resistance offered by an inductor to the flow of alternating current, measured in ohms.
Impedance
The total resistance to the flow of alternating current (AC) in a circuit, comprising both resistive and reactive components, measured in ohms.
Inductive Reactance
The opposition that an inductor presents to alternating current, due to the inductor's inductance, measured in ohms.
Power (P)
The rate at which electrical energy is transferred by an electric circuit, usually measured in watts (W).
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