Assume that by devoting all its resources to the production of X,nation Alpha can produce 40 units of X.By devoting all its resources to Y,Alpha can produce 60Y.Comparable figures for nation Beta are,60X and 40Y.
-Refer to the above information.If Alpha had produced 20X and 30Y and Beta had produced 30X and 20Y before specialization and trade,then we can say that the gains from specialization and trade are 10X and 10Y.

Question

Quizplus · Accepted Answer

Before specialization and trade, Alpha could produce 20X and 30Y, while Beta could produce 30X and 20Y. However, after specialization and trade, Alpha can specialize in producing Y, and trade with Beta for X, while Beta can specialize in producing X and trade with Alpha for Y. As a result, Alpha can trade 20Y for 30X with Beta, gaining an additional 10X, while Beta can trade 30X for 20Y with Alpha, gaining an additional 10Y. Therefore, the gains from specialization and trade are 10X and 10Y.

Assume That by Devoting All Its Resources to the Production