The maximum production possible in Rome and in Cathay are as follows:

-If each country specializes in the production of what it does best and trades with the other,what is the combined output?
A)20 bread and 20 figs.
B)30 bread and 30 figs.
C)40 bread and 40 figs.
D)60 bread and 60 figs.

Question

The maximum production possible in Rome and in Cathay are as follows:
 
-If each country specializes in the production of what it does best and trades with the other,what is the combined output?
A)20 bread and 20 figs. 
B)30 bread and 30 figs. 
C)40 bread and 40 figs. 
D)60 bread and 60 figs.

Quizplus · Accepted Answer

Since each country specializes in what they do best, they will produce the product that they have a comparative advantage in. Let's say Rome produces bread and Cathay produces figs. Rome can produce a maximum of 20 bread (10 on each axis) and Cathay can produce a maximum of 20 figs (10 on each axis). By specializing and trading with each other, Rome can trade 10 bread for 10 figs with Cathay, and both countries can end up with 30 bread and 30 figs. Therefore, the combined output is 40 bread and 40 figs.

The Maximum Production Possible in Rome and in Cathay Are