Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs below.
A. 5 steel and 15 chemicals
B. 10 chemicals
C. 15 steel and 5 chemicals
D. 25 steel
ANSWER:
A. 5 steel and 15 chemicals