The following question are based on the following information. Country A can produce either 10,000 barrels of petroleum or 12,000 bushels of wheat with one unit of its resources. Country B can produce either 7,000 barrels of petroleum or 15,000 bushels of wheat with one unit of its resources.
-If each country shifts one unit of resources into the production of the good in which it is relatively more efficient,world output would rise by
A) 10,000 bushels of wheat.
B) 17,000 barrels of petroleum.
C) 10,000 barrels of petroleum and 15,000 bushels of wheat.
D) 3,000 barrels of petroleum and 3,000 bushels of wheat.
E) 8,000 bushels of wheat and fall by 2,000 barrels of petroleum.

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Quizplus · Accepted Answer

Country A is relatively more efficient in producing petroleum (10,000 barrels vs. 12,000 bushels of wheat), and Country B is more efficient in producing wheat (15,000 bushels vs. 7,000 barrels of petroleum). By shifting resources, Country A produces 10,000 barrels of petroleum instead of 12,000 bushels of wheat, and Country B produces 15,000 bushels of wheat instead of 7,000 barrels of petroleum. The net gain is 3,000 barrels of petroleum and 3,000 bushels of wheat.

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