# Alpha and Beta, two tiny islands in the Pacific, produce pearls and pineapples. The following production possibilities schedules describe their potential output in tons per year:

Alpha and Beta, two tiny islands in the Pacific, produce pearls and pineapples. The following production possibilities schedules describe their potential output in tons per year:

Instructions: Enter your responses as a whole number.

Suppose Alpha and Beta agree that the terms of trade will be one for one and exchange 10 pearls for 10 pineapples.

a. If Alpha produced 6 pearls and 15 pineapples while Beta produced 30 pearls and 8 pineapples before they decided to trade, how many pearls would each be producing after trade? Assume that the two countries specialize according to their comparative advantage.

(i) Alpha: ______ pearls

(ii) Beta: ______ pearls

b. How much would the combined production of pineapples increase for the two islands due to specialization?

_______pineapples

c. How much would the combined production of pearls increase?

_______ pearls

d. What is the post-trade consumption for each island?

Alpha consumes _____ pearls and ______ pineapples.

Beta consumes ______ pearls and ______ pineapples.

0 0