Questions: Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces chinos will produce million pairs per day, and the country that produces pistachios will produce million pounds per day.

To determine how many million pairs of chinos and million pounds of pistachios each country will produce per day, we need to understand the concept of comparative advantage and the production possibilities of each country.

Comparative Advantage: Comparative advantage occurs when a country can produce a good at a lower opportunity cost than another country. This means that even if one country is more efficient at producing both goods, each country should specialize in the good for which it has the lowest opportunity cost.

Steps to Determine Production:

1. Identify Opportunity Costs:

   • Calculate the opportunity cost of producing chinos and pistachios in each country. This involves determining how much of one good must be given up to produce an additional unit of the other good.

2. Determine Comparative Advantage:

   • Compare the opportunity costs between the two countries for each good. The country with the lower opportunity cost for chinos should specialize in chinos, and the country with the lower opportunity cost for pistachios should specialize in pistachios.

3. Specialization:

   • Once each country specializes in the good for which it has a comparative advantage, it will allocate all its resources to produce that good.

4. Production Capacity:

   • Use the production capacity data (which should be provided in the problem) to determine how much of each good the countries can produce when they specialize completely.

Example: Suppose Country A and Country B are the two countries involved. If Country A can produce 10 million pairs of chinos or 5 million pounds of pistachios per day, and Country B can produce 6 million pairs of chinos or 12 million pounds of pistachios per day, we calculate the opportunity costs:

• Country A:

  • Opportunity cost of 1 pair of chinos = 0.5 pounds of pistachios
  • Opportunity cost of 1 pound of pistachios = 2 pairs of chinos

• Country B:

  • Opportunity cost of 1 pair of chinos = 2 pounds of pistachios
  • Opportunity cost of 1 pound of pistachios = 0.5 pairs of chinos

Comparative Advantage:

• Country A has a comparative advantage in producing chinos (lower opportunity cost).
• Country B has a comparative advantage in producing pistachios (lower opportunity cost).

Specialization and Production:

• Country A will produce 10 million pairs of chinos per day.
• Country B will produce 12 million pounds of pistachios per day.

In this example, the country that produces chinos will produce 10 million pairs per day, and the country that produces pistachios will produce 12 million pounds per day. Adjust these numbers based on the specific production capacities provided in your problem.