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The following table shows the quantity of wine and beer (output per hour of work) that can be produced in two countries What is the

The following table shows the quantity of wine and beer (output per hour of work) that can be produced in two countries

  1. What is the opportunity cost of producing wine in Country A? What is the opportunity cost of producing wine in Country B? Which country should specialize in the production of which good?
  2. Suppose that each country has 1,000 hours of work available. If trade is allowed, how much total output will be produced in each country? Provide an example of a final allocation of wine and beer among these two countries, after trade.

Country

Wine

Beer

Country A

80 units

60 units

Country B

50 units

30 units

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