The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons.
Gamma's production possibilities
$\begin{array} { | l | c | c | c | c | c | }
\hline & A & B & C & D & E \
\hline Tea & 120 & 90 & 60 & 30 & 0 \
\hline Pots & 0 & 30 & 60 & 90 & 120 \
\hline
\end{array}$
Sigma's production possibilities
$\begin{array} { | l | c | c | c | c | c | }
\hline & A & B & C & D & E \
\hline Tea & 40 & 30 & 20 & 10 & 0 \
\hline Pots & 0 & 30 & 60 & 90 & 120 \
\hline
\end{array}$
On the basis of this information,

Question

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons.
Gamma's production possibilities
$\begin{array} { | l | c | c | c | c | c | } 
\hline & A & B & C & D & E \
\hline Tea & 120 & 90 & 60 & 30 & 0 \
\hline Pots & 0 & 30 & 60 & 90 & 120 \
\hline
\end{array}$
Sigma's production possibilities
$\begin{array} { | l | c | c | c | c | c | } 
\hline & A & B & C & D & E \
\hline Tea & 40 & 30 & 20 & 10 & 0 \
\hline Pots & 0 & 30 & 60 & 90 & 120 \
\hline
\end{array}$
On the basis of this information,

Quizplus · Accepted Answer

Gamma has an absolute advantage in both tea and pots production compared to Sigma. However, Sigma has a comparative advantage in tea production as it has a lower opportunity cost in producing tea. In Gamma, producing one more ton of tea costs 30 tons of pots, while in Sigma it only costs 10 tons of pots. On the other hand, Gamma has a lower opportunity cost in pots production, as producing one more ton of pots only costs 30 tons of tea compared to Sigma's 90 tons of tea. Therefore, it is beneficial for Gamma to export tea to Sigma and for Sigma to export pots to Gamma, as this will result in both nations increasing their consumption of both products.

The Accompanying Tables Give Production Possibilities Data for Gamma and Sigma