Use the following to answer question(s): Heartland and Soulland
Suppose that there are only two countries in the world, Heartland and Soulland.The two countries produce only two goods, corn and drill presses.At its current level of production, Heartland must give up production of 1/4 drill press to produce an additional 100 bushels of corn.Soulland must give up 1 drill press to produce an additional 100 bushels of corn.No trade now occurs between the two economies, and both economies are operating on their respective production possibilities frontiers.
-(Exhibit: Heartland and Soulland) If trade now opens up between the two economies, we can expect that:

Question

Quizplus · Accepted Answer

Heartland has a lower opportunity cost of producing corn than Soulland (1/4 drill press vs 1 drill press), so it makes sense for Heartland to specialize in producing corn and exporting it to Soulland. Soulland, on the other hand, has a lower opportunity cost of producing drill presses than Heartland (1 drill press vs 1/4 drill press), so it makes sense for Soulland to specialize in producing drill presses and exporting them to Heartland. Therefore, Heartland will export corn to Soulland and import drill presses from Soulland.

Use the Following to Answer Question(s): Heartland and Soulland