The Only Two Countries in the World, Alpha and Omega

question 393

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:

Life-Long Learning

The continuous pursuit of knowledge and skills throughout an individual's life for personal and professional development.

Collaboration

The action of working with someone to produce or create something, often highlighting the importance of teamwork and shared goals.

Collegiality

The cooperative relationship between colleagues who share responsibility and respect in a professional setting.

Common Goal

An objective or purpose shared by a group of individuals, which they strive to achieve collectively.