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Answer the Question on the Basis of the Following Production

Question 33

Multiple Choice

Answer the question on the basis of the following production possibilities data for Landia and Scandia: Landia Production Possibilities:

ABCDE Fish 86420 Chips 010203040\begin{array} { l c c c c c } & \underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish }&8&6&4&2&0\\ \text { Chips } & 0 & 10 & 20 & 30 & 40 \end{array}

Scandia Production Possibilities:

ABCDE Fish 1612840 Chips 012243648\begin{array} { c c c c c } &\underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish } &16 & 12 & 8 & 4 & 0 \\\text { Chips } &0 & 12 & 24 & 36 & 48 \end{array} Refer to the given data.Assume that before specialization and trade Landia was producing combination C and Scandia was producing combination B.If these two nations now specialize completely based on comparative advantage,the total gains from specialization and trade would be:


A) 8 fish and 2 chips.
B) 10 fish and 4 chips.
C) 0 fish and 8 chips.
D) 4 fish and 6 chips.

Correct Answer:

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