The following are production possibilities tables for Japan and Hawaii. Assume that prior to specialization and trade, the optimum product-mix for Japan is alternative B and for Hawaii alternative D Product japan's production alternatives B C D E Radios (in thousands) 30 24 18 Pineapples (In tons) 12 24 Product Hawall's production alternatives C D Radios (In thousands) 10 Pineapples lin tons) 20 a Are comparative-cost conditions such that the two na- tions should specialize? If so. what product should each pro- duce? Jes, Japan should produce radios and Hawaii should produce pineapples 20 tons b What is the total gain in radio and pineapple output - 1 tons (6+ 12 tons which results from this specialization? 2 tons pineapples Gain = 2 tons pine apples Gam = 2,000 radios 30,000 28,000 ( 24, 000 + 4 , 000 c What are the limits of the terms of trade? Suppose that 2,000 radios actual terms of trade are I unit of radios for 1) units of pineap- ples and that 4 units of radios are exchanged for 6 units of pineapples. What are the gains from specialization and trade for each nation? d Can you conclude from this illustration that specializa- tion according to comparative advantage results in the more ellicient use of world resources? Explain. yes, through specialization + trade in this example the world is obtaining more output from its fixed resources