Use the following to answer question:
-(Scenario: The Production of Wheat and Toys)Use Scenario: Production of Wheat and Toys.If each country specializes completely in the good for which it has the comparative advantage,which combination represents a maximum possible amount of total production of the two goods,given the specialization?

Question

Use the following to answer question: 
-(Scenario: The Production of Wheat and Toys)Use Scenario: Production of Wheat and Toys.If each country specializes completely in the good for which it has the comparative advantage,which combination represents a maximum possible amount of total production of the two goods,given the specialization?

Quizplus · Accepted Answer

According to the scenario, Country A has a comparative advantage in producing wheat and can produce 100 units of wheat or 50 units of toys. Country B has a comparative advantage in producing toys and can produce 150 units of toys or 25 units of wheat.

If each country specializes completely in the good for which it has a comparative advantage, then Country A should produce only wheat and Country B should produce only toys.

Therefore, the maximum possible production of wheat will be 50 units (which is what Country A can produce) and the maximum possible production of toys will be 75 units (which is what Country B can produce).

Hence, the correct answer is choice B (50 wheat and 75 toys).

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