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Table 131 Shows the Production Possibilities Curves for Augustus and Nero

Question 158

Essay

Table 13.1 shows the production possibilities curves for Augustus and Nero. Prior to specialization and trade, Augustus is producing combination B, and Nero is producing combination
D.
Table 13.1
 Augustus’s Production Possibilities  Product  A  B  C  D  E  Apples 86420 Oranges 02468\begin{array}{l}\text { Augustus's Production Possibilities }\\\begin{array}{|l|l|l|l|l|l|}\hline \text { Product } & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \\\hline \text { Apples } & 8 & 6 & 4 & 2 & 0 \\\hline \text { Oranges } & 0 & 2 & 4 & 6 & 8 \\\hline\end{array}\end{array}

 Nero’s Production Possibilities  Product  A  B  C  D  E  Apples 129630 Oranges 01234\begin{array}{l}\text { Nero's Production Possibilities }\\\begin{array}{|l|c|c|c|c|c|}\hline \text { Product } & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \\\hline \text { Apples } & 12 & 9 & 6 & 3 & 0 \\\hline \text { Oranges } & 0 & 1 & 2 & 3 & 4 \\\hline\end{array}\end{array}
a) What is the total output of the two countries for both products?
b) If each country were to specialize in the product in which it has a comparative advantage, what will be the total output of the two countries for both products?
c) What will be the gain from trade?

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