Assume Country G and Country H can produce two goods: Good X and Good Y. Country G has abundant capital goods. Country H, on the other hand, has abundant low-skilled labor but little capital. Production of Good X is capital intensive, while the production of Good Y is labor-intensive. Both countries have constant opportunity costs of production in both goods. The following shows the production possibilities for both countries.

Production Per Year Country G Country H Good X Good y Good X Good y ( thousands ) ( thousands ) ( thousands ) (thousands 500 O 200 O 375 75 100 200 250 150 50 300 O 300 O 400