You are the Minister of Trade for a small island country in the South Pacific with the following annual production possibilities curve:
You are negotiating a deal with a neighboring island that has the following annual PPC:
Refer to the figure above.Both islands specialize exclusively in the product for which they have a comparative advantage.You have agreed to sell the other island 350 coconuts in exchange for 1,300 fish.After the trade the other island has a total of _____ coconuts and _____ fish.
A) 850;1,200
B) 500;1,200
C) 350;1,500
D) 350;1,200

Question

You are the Minister of Trade for a small island country in the South Pacific with the following annual production possibilities curve: 
You are negotiating a deal with a neighboring island that has the following annual PPC: 
Refer to the figure above.Both islands specialize exclusively in the product for which they have a comparative advantage.You have agreed to sell the other island 350 coconuts in exchange for 1,300 fish.After the trade the other island has a total of _____ coconuts and _____ fish.
A) 850;1,200 
B) 500;1,200 
C) 350;1,500 
D) 350;1,200

Quizplus · Accepted Answer

By specializing,the other island produced no coconuts and 2,500 fish.Trade left them with 350 coconuts and 1,300 fewer fish.

You Are the Minister of Trade for a Small Island