The diagram presents the production possibility curves for two economies, Northland (Y1–X1) and Southland (Y2–X2). Each economy specialises according to the theory of comparative advantage and then trades with the other. What can be concluded from the diagram?
- ABoth economies face increasing opportunity costs.
- BPoint P represents the final equilibrium outcome.
- CPoint R shows the total possible combined production of food and drink.
- DAll points on Y1–X2 are only attainable through trade.