Suppose that the two nations in Problems 31-1 and 31-2 choose to specialize in producing the goods for which they have a comparative advan- tage. They agree to trade at a rate of exchange of 1 pastry for 1 sandwich. At this rate of exchange, what are the maximum possible numbers of pas- tries and sandwiches that they could agree to trade?

Problem 31-1

To answer the questions below, consider the following table for the neighboring nations of North- land and West Coast. The table lists maximum feasible hourly rates of production of pastries if no sandwiches are produced and maximum feasible hourly rates of production of sandwiches if no pas- tries are produced. Assume that the opportunity costs of producing these goods are constant in both nations.

a. What is the opportunity cost of producing pas- tries in Northland? Of producing sandwiches in Northland?

b. What is the opportunity cost of producing pas- tries in West Coast? Of producing sandwiches in West Coast?

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Product Pastries (per hour) Sandwiches (per hour) Northland West Coast 50,000 100,000 25,000 200,000