Exhibit 15-1 Production possibilities curves

In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If these two nations trade, Nabia should specialize in the production of:

Question

Exhibit 15-1 Production possibilities curves

In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If these two nations trade, Nabia should specialize in the production of:

Quizplus · Accepted Answer

Nabia has a comparative advantage in producing wheat, as it has a lower opportunity cost for producing wheat compared to producing corn. Therefore, Nabia should specialize in producing wheat and trade with Pada for corn. Pada, in turn, should specialize in producing corn and trade with Nabia for wheat. This will lead to both countries benefiting from trade due to their comparative advantages.

Exhibit 15-1 Production Possibilities Curves