(Scenario: The Production of Wheat and Toys) Use Scenario: Production of Wheat and Toys.If each country specializes completely in the good for which it has the comparative advantage,which combination represents a maximum possible amount of total production of the two goods,given the specialization?

A) 50 wheat and 100 toys
B) 50 wheat and 75 toys
C) 25 wheat and 75 toys
D) 100 toys and 25 wheat

Question

Jackelyn Martinez · Accepted Answer

Final Answer : B, Explanation :  According to the scenario, Country A has a comparative advantage in producing wheat and can produce 100 units of wheat or 50 units of toys. Country B has a comparative advantage in producing toys and can produce 150 units of toys or 25 units of wheat.If each country specializes completely in the good for which it has a comparative advantage, then Country A should produce only wheat and Country B should produce only toys.Therefore, the maximum possible production of wheat will be 50 units (which is what Country A can produce) and the maximum possible production of toys will be 75 units (which is what Country B can produce).Hence, the correct answer is choice B (50 wheat and 75 toys).

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