United States 10,000 shoes

or 40,000 refrigerators

Mexico

8,000 shoes

or 10,000 refrigerators

TABLE 19.8 Production Possibilities before Trade with Complete Specialization

As always, the slope of the production possibility frontier for each country is the opportunity cost of one

refrigerator in terms of foregone shoe production–when labor is transferred from producing the latter to

producing the former (see Figure 19.4).

FIGURE 19.4 Production Possibility Frontiers (a) With 40 workers, the United States can produce either 10,000

shoes and zero refrigerators or 40,000 refrigerators and zero shoes. (b) With 40 workers, Mexico can produce a

maximum of 8,000 shoes and zero refrigerators, or 10,000 refrigerators and zero shoes. All other points on the

production possibility line are possible combinations of the two goods that can be produced given current

resources. Point A on both graphs is where the countries start producing and consuming before trade. Point B is
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