Answer:
15 blankets; 35 meals
Explanation:
First, we compute Opportunity Cost (OC).
In Caninia,
OC of blanket = 8/2 = 4 meals
OC of meals = 2/8 = 0.25 blanket
In Felinia,
OC of blanket = 1/5 = 0.2 meals
OC of meals = 5/1 = 5 blanket
Since Felinia can produce blankets at lower OC (0.2 < 4), so
Felinia has comparative advantage and specializing in blankets.
Total blankets produced with trade = 5 x 10
= 50
Since Caninia can produce meals at lower OC (0.25 < 5), so
Caninia has comparative advantage and specializing in meals.
Total meals produced with trade = 8 x 10
= 80
After trade,
Total blankets produced = 10 + 25
= 35
Decrease in blanket output = 50 - 35
= 15
Total meals produced = 40 + 5
= 45
Decrease in meals output = 80 - 45
= 35
