Question

Refer to the above data. Suppose that before specialization and trade Alpha chose production alternative C and Beta

chose production alternative B. After specialization and trade the gains will be:
A) 20 tons of fish.
C) 20 tons of fish and 20 tons of chips.
D) 240 tons of fish and 20 tons of chips.
B) 20 tons of chips.

Answer 1

Given the information provided, if Alpha specializes in the production of option C and Beta specializes in the production of option B, then the gains from specialization and trade will be option D) 240 tons of fish and 20 tons of chips. This is because Alpha's specialization in option C will allow for a large increase in fish production, while Beta's specialization in option B will lead to an increase in chip production. Therefore, the total gains from specialization and trade will be 240 tons of fish and 20 tons of chips.