The next four questions deal with the following situation. Assume that all PPFs are linear.

Consider two empires: Byzantium and Abyssinia. They can only produce two goods: salt and wine. In a single year, Byzantium can make 15,000 tons of salt, or 30,000 tons of wine, if it uses all of its resources. In the same period of time, Abyssinia can produce 10,000 tons of salt, or 2,000 tons of wine, if it uses all of its resources. Assume that each empire has linear Production Possibilities Frontiers.

1. Suppose that both nations are initially in a state of autarky. If Byzantium produces 7,500 tons of salt and 15,000 tons of wine, then this allocation would be:

(A) Feasible and productively efficient.

(B) Feasible and productively inefficient.

(C) Infeasible.

(D) Allocatively inefficient.

2. Suppose that both nations are initially in a state of autarky. If Abyssinia produces 4,000 tons of salt and 1,000 tons of wine, then this allocation would be:

(A) Feasible and productively efficient.

(B) Feasible and productively inefficient.

(C) Infeasible.

(D) Built different.

3. Now assume that both nations are productively efficient. Initially, before trade, Byzantium produces 10,000 tons of salt and 20,000 tons of wine. Abyssinia produces 10,000 tons of salt and no wine. Now they decide to trade. Which of the following is a beneficial trade for both nations?

(A) Byzantium gives Abyssinia 1,000 tons of wine, in exchange for 6,000 tons of salt.

(B) Abyssinia gives Byzantium 1,000 tons of salt, in exchange for 3,000 tons of wine.

(C) Byzantium gives Abyssinia 1,000 tons of wine, in exchange for 4,000 tons of salt.

(D) Byzantium gives Abyssinia 1,000 tons of salt, in exchange for 1,000 tons of wine.

4. If each country were to specialize in the goods for which they have comparative advantage, how much would each produce?

(A) Byzantium would produce 15,000 tons of salt, and Abyssinia would produce 10,000 tons of salt.

(B) Byzantium would produce 15,000 tons of salt, and Abyssinia would produce 2,000 tons of wine.

(C) Byzantium would produce 30,000 tons of wine, and Abyssinia would produce 2,000 tons of wine.

(D) Byzantium would produce 30,000 tons of wine, and Abyssinia would produce 10,000 tons of salt.