SCENARIO: CHILE AND ARGENTINA

Multiple Choice

SCENARIO: CHILE AND ARGENTINA
Chile and Argentina each produce jellybeans and peanut butter, using
Labor as their only resource.Each country has 1,000 hours of labor.In
Chile, an hour produces a pound of jellybeans and 2 hours produce a
Pound of peanut butter.In Argentina, an hour produces a pound of
Jellybeans and 3 hours produces a pound of peanut butter.When they do
Not trade with each other, Chile consumes 600 pounds of jellybeans and
200 pounds of peanut butter, and Argentina consumes 400 pounds of
Jellybeans and 200 pounds of peanut butter.
Reference: Ref 2­10
(Scenario: Chile and Argentina) Suppose that Chile and Argentina begin
To trade with each other.Each completely specializes in the product in
Which it finds its comparative advantage.How many more pounds of
Peanut butter and jellybeans do the two countries jointly produce
Compared with production before they began to trade?

A) 1,000 pounds of jellybeans and 500 pounds of peanut butter
B) 0 pounds of jellybeans and 500 pounds of peanut butter
C) 1,000 pounds of jellybeans and 0 pounds of peanut butter
D) 0 pounds of jellybeans and 100 pounds of peanut butter