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

When trade opens up between the two economies, Heartland will specialize in producing the good in which it has a comparative advantage, which is corn since it has a lower opportunity cost of producing it than Soulland does. Similarly, Soulland will specialize in producing drill presses since it has a lower opportunity cost of producing it than Heartland does. As a result, both countries can produce more of both goods through specialization and trade, leading to an increase in consumption for both goods in both countries. Therefore, choice A is the best answer.

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