Reference: Ref 2-9 (Figure: Countries A & B) Refer to the figure regarding countries A &B. If both countries depicted fully allocate all of their labor towards the good in which they have a comparative advantage, the combined production for the two countries would be _______ units of Good X, and _______ units of Good Y.
A) 100; 80
B) 70; 90
C) 40; 100
D) 100; 100

Question

Reference: Ref 2-9 (Figure: Countries A & B) Refer to the figure regarding countries A &B. If both countries depicted fully allocate all of their labor towards the good in which they have a comparative advantage, the combined production for the two countries would be _______ units of Good X, and _______ units of Good Y.
A) 100; 80 
B) 70; 90 
C) 40; 100 
D) 100; 100

Quizplus · Accepted Answer

Country A has a comparative advantage in producing Good X, and Country B has a comparative advantage in producing Good Y. If both countries fully allocate all of their labor towards their respective comparative advantages, Country A will produce 40 units of Good X, and Country B will produce 90 units of Good Y. Therefore, the combined production for the two countries would be 70 units of Good X (40 from Country A and 30 from Country B) and 90 units of Good Y (60 from Country B and 30 from Country A). The answer is choice B.

Reference: Ref 2-9 (Figure: Countries a & B) Refer to the Figure