When the two countries did not specialize, the total production of jeans was 23 million pairs per month, and the total production of corn was 68 million bushels per month. because of specialization, the total production of jeans has increased by million pairs per month, and the total production of corn has increased by million bushels per month. because the two countries produce more jeans and more corn under specialization, each country is able to gain from trade?

Question

Sonny Sanchez

Business

20 December, 02:13

When the two countries did not specialize, the total production of jeans was 23 million pairs per month, and the total production of corn was 68 million bushels per month. because of specialization, the total production of jeans has increased by million pairs per month, and the total production of corn has increased by million bushels per month. because the two countries produce more jeans and more corn under specialization, each country is able to gain from trade?

+2

Answers (1)

Know the Answer?

Omar Castro · Answer 1

Of course, both countries will gain from specialization and trade.

Explanation:

Specialization results in one of the countries producing more jeans because the opportunity cost of producing corn is lower, and the other country producing more corn because the opportunity cost of producing jeans is lower. Then they will trade the good that they need in exchange for the goods that they produce at a lower cost.

*Opportunity costs are the costs of choosing one alternative activity or investment over another. Countries will produce the goods that have the highest opportunity costs since not producing them will result in a greater loss.