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The Following Data Outline Production Choices (A or B) in Two

Question 1

Multiple Choice

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10.

 Output per worker in Gamma  Output per worker in Sigma ABAB Tea 1200 Tea 400 Pots 0120 Pots 0120\begin{array}{|l|c|c|l|l|c|c|}\hline{\text { Output per worker in Gamma }} & &&&{\text { Output per worker in Sigma }} \\\hline & \mathrm{A} & \mathrm{B} & & & \mathrm{A} & \mathrm{B} \\\hline \text { Tea } & 120 & 0 & & \text { Tea } & 40 & 0 \\\hline \text { Pots } & 0 & 120 & & \text { Pots } & 0 & 120 \\\hline\end{array}
-Assume that before specialization and trade,each nation devoted half of its workforce to each product.If these two nations fully specialize in accordance with comparative advantage,the total gains from specialization would be:


A) 200 units of tea and 200 pots
B) 400 pots
C) 400 units of tea
D) 400 units of tea and 400 pots
E) 600 units of tea and 600 pots

Correct Answer:

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