Suppose that the two nations in Problem 31-4 decide to specialize in producing the good for which they have a comparative advantage and to engage in trade. Would residents of both nations find a rate of exchange of 4 bottles of wine for 1 8K TV potentially agreeable? Why or why not? To answer Problems 31-7 refer to the following table, which shows possible combinations of hourly outputs of portable power banks and flash memory drives in South Shore and neighboring East Isle, in which opportunity costs of producing both products are constant.

Problem 31-4

Residents of the nation of Border Kingdom can forgo production of 8K televisions and utilize all available resources to produce 300 bottles of high-quality wine per hour. Alternatively, they can forgo producing wine and instead produce 60 8K TVs per hour. In the neighboring country of Coastal Realm, residents can forgo pro- duction of 8K TVs and use all resources to produce 150 bottles of high-quality wine per hour, or they can forgo wine production and produce 50 8K TVs per hour. In both nations, the opportunity costs of producing the two goods are constant.

a. What is the opportunity cost of producing 8K TVs in Border Kingdom? Of producing bottles of wine in Border Kingdom?

b. What is the opportunity cost of producing 8K TVs in Coastal Realm? Of producing bottles of wine in Coastal Realm?

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South Shore Portable Power Banks 75 60 45 30 15 0 Flash Drives 0 30 60 90 120 150 East Isle Portable Power Banks 100 80 60 40 20 0 Flash Drives 0 10 20 30 40 50