The production possibilities schedules

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Alpha and Beta, two tiny islands off the east coast of Tricoli, produce pearls and pineapples. The production possibilities schedules in the table below describe their potential output in tons per year. Suppose the two islands agree to trade 10 pearls for 10 pineapples. (a) If Alpha produced 6 pearls and 15 pineapples and Beta produced 30 pearls and 8 pineapples before they decided to trade, how much would each be producing after trade became possible? Assume that the two countries specialize just enough to maintain their consumption of the item they export, and make sure each island trades the item for which it has a comparative advantage. Alpha would produce pineapples and pearls. Beta would produce pineapples and pearls. (b) i) How much would the combined production of pineapples increase for the two islands due to trade? Combined production of pineapples increases by . ii) How much would the combined production of pearls increase? Combined production of pearls increases by.

Reference no: EM131098555

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