Below is the productivity per worker (kilos per day)in the wheat and bean industries of Caledonia and Ibrox.The working population in each country is 16 million people.

-Refer to the data above to answer this question.Suppose that initially each country was self-sufficient in the two products and employed half of their working populations in each industry.If subsequently each country were to totally specialize in the product in which it has a comparative advantage,what would be the subsequent gains from trade?

Question

Below is the productivity per worker (kilos per day)in the wheat and bean industries of Caledonia and Ibrox.The working population in each country is 16 million people.
 
-Refer to the data above to answer this question.Suppose that initially each country was self-sufficient in the two products and employed half of their working populations in each industry.If subsequently each country were to totally specialize in the product in which it has a comparative advantage,what would be the subsequent gains from trade?

Quizplus · Accepted Answer

From the table, we can see that Caledonia has a comparative advantage in wheat production, while Ibrox has a comparative advantage in bean production. If each country specializes in the product in which it has a comparative advantage, then Caledonia would produce 32 million kilos of wheat per day (16 million workers x 2 kilos per worker per day) and Ibrox would produce 64 million kilos of beans per day (16 million workers x 4 kilos per worker per day). Then, they can trade and each country can consume 16 million kilos of wheat and 32 million kilos of beans, resulting in a total gain from trade of 16 wheat and 32 beans. Therefore, the answer is B.

Below Is the Productivity Per Worker (Kilos Per Day)in the Wheat