The following graph shows the production possibilities frontier for the imaginary country of Arcadia under conditions of increasing costs. In the absence of trade, the relative cost of wheat in Arendis in terms of computers (or the marginal rate of transformation (MRT) of wheat into computers) is shown by the slope of line to, tangent to the production possibilities frontier at point A. 109 Consumption After Trade WHEAT (Bushels) 10 12 14 18 18 COMPUTERS Which of the following most accurately describes Arcadia's economy in the absence of trade? O Arcadia produces 78 bushels of wheat but consumes only 60 bushels of wheat. Arcadia consumes 6 computers and 78 bushels of wheat. O Arcadia produces and consumes 6 computers and 78 bushels of wheat. O Arcadia produces and consumes 6 computers and 60 bushels of wheat. O Arcadia produces 6 computers and 78 bushels of wheat. At point A, the slope of line to reveals that Arcadia must forego bushels of wheat in order to produce i computer. (Hint: Select a line to see its slope.) Suppose that Arcadia recognizes that it has a comparative advantage in the production of computers. Arcadia decides to specialize in making computers and enters international trade. The international terms of trade (the price of wheat in terms of computers) are shown by the slope of the line far tangent to the production possibilities frontier at point B. The slope of to reveals that now Arcadia foregoes | |bushels of wheat in order to produce 1 computer. This means that the absolute value of the production possibilities frontier's slope Assume that Arcadia chooses to consume the same number of computers as it did in the absence of trade. On the previous graph, use the purple point (diamond symbol) to indicate Arcadia's consumption after trade. According to the graph, Arcadia's production gain from specialization is , and its consumption gain from trade is