What will be the resulting gains from trade? Explain your answer.

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The following are hypothetical production possibilities tables

The following are hypothetical production possibilities tables

Question
The following are hypothetical production possibilities tables for New Zealand and Spain. All data are in millions of Bushels. New Zealand’s production possibilities table: A B C D E F Apples 0 10 20 30 40 50 Plums 25 20 15 10 5 0 Spain’s production possibilities table: A B C Apples 0 5 10 Plums 20 10 0 (a) Which nation has a comparative advantage in producing Apples? In producing Plums? (b) Assume that prior to specialization and trade, New Zealand chose production possibility E and Spain chose production possibility B. Now each specializes according to comparative advantage. What will be the resulting gains from trade? Explain your answer.

The following are hypothetical production possibilities tables

 

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