The figure below shows production possibilities curves for tomatoes and oranges in two prefectures in a country.

-Refer to the figure above. Suppose that Prefecture A produces at point W, while Prefecture B produces at point X. Could there be gains from trade (Prefecture A sells tomatoes to Prefecture B, and Prefecture B sells oranges to Prefecture B)? Why or why not?
A) Yes, because Prefecture A has a comparative advantage in tomato production beyond 1 billion pounds while Prefecture B has a comparative advantage in orange production beyond 800 million pounds.
B) Yes, because Prefecture A produces more tomatoes while Prefecture B produces more oranges.
C) No, because Prefecture A's opportunity cost of producing additional pounds of tomatoes at W is higher than Prefecture B's opportunity cost at X.
D) No, because Prefecture A's opportunity cost of producing additional pound of oranges at W is higher than Prefecture B's opportunity cost at X.

Question

The figure below shows production possibilities curves for tomatoes and oranges in two prefectures in a country.
 
-Refer to the figure above. Suppose that Prefecture A produces at point W, while Prefecture B produces at point X. Could there be gains from trade (Prefecture A sells tomatoes to Prefecture B, and Prefecture B sells oranges to Prefecture B)? Why or why not?
A) Yes, because Prefecture A has a comparative advantage in tomato production beyond 1 billion pounds while Prefecture B has a comparative advantage in orange production beyond 800 million pounds. 
B) Yes, because Prefecture A produces more tomatoes while Prefecture B produces more oranges. 
C) No, because Prefecture A's opportunity cost of producing additional pounds of tomatoes at W is higher than Prefecture B's opportunity cost at X. 
D) No, because Prefecture A's opportunity cost of producing additional pound of oranges at W is higher than Prefecture B's opportunity cost at X.

Quizplus · Accepted Answer

The Answer of The figure below shows production possibilities curves for tomatoes and oranges in two prefectures in a country.
 
-Refer to the figure above. Suppose that Prefecture A produces at point W, while Prefecture B produces at point X. Could there be gains from trade (Prefecture A sells tomatoes to Prefecture B, and Prefecture B sells oranges to Prefecture B)? Why or why not?
A) Yes, because Prefecture A has a comparative advantage in tomato production beyond 1 billion pounds while Prefecture B has a comparative advantage in orange production beyond 800 million pounds. 
B) Yes, because Prefecture A produces more tomatoes while Prefecture B produces more oranges. 
C) No, because Prefecture A's opportunity cost of producing additional pounds of tomatoes at W is higher than Prefecture B's opportunity cost at X. 
D) No, because Prefecture A's opportunity cost of producing additional pound of oranges at W is higher than Prefecture B's opportunity cost at X.

The Figure Below Shows Production Possibilities Curves for Tomatoes and Oranges