Suppose both countries illustrated in Figure 35.1 specialized completely in the good they could produce with the lowest opportunity cost.What would the total production of motorcycles be?

Question

Quizplus · Accepted Answer

From the production possibility curve, we can see that Country A has a comparative advantage in producing motorcycles, while Country B has a comparative advantage in producing cars. If both countries specialize completely in producing the good with the lowest opportunity cost, Country A will produce all 2,000 motorcycles and Country B will produce 2,000 cars. Therefore, the total production of motorcycles will be 4,000.

Suppose Both Countries Illustrated in Figure 35