Country

Quantity produced after 100%

Quantity produced after 100% specialization

specialization — Oil (barrels)

— Corn (bushels)

Saudi Arabia

100

United States

0

Total World

Production

100

TABLE 19.6 How Specialization Expands Output

0

100

100

What if we did not have complete specialization, as in Table 19.6? Would there still be gains from trade?

Consider another example, such as when the United States and Saudi Arabia start at C and C', respectively, as

Figure 19.2 shows. Consider what occurs when trade is allowed and the United States exports 20 bushels of

corn to Saudi Arabia in exchange for 20 barrels of oil.

FIGURE 19.3 Production Possibilities Frontier in Saudi Arabia Trade allows a country to go beyond its domestic

production-possibility frontier
456 19 • International Trade

Starting at point C, which shows Saudi oil production of 60, reduce Saudi oil domestic oil consumption by 20,
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