Possible gains from specialization     To the right we show a line we have labeled STOR (Specialize and Trade at the Output Ratio). This is a hypothetical line drawn to illustrate how gains from trade might come about. With specialization, total output will be 50 graphic images and 60 web pages, thus, the output ratio is 5 images to 6 pages.

    If Jeff and Jenn specialize and agree to trade at this ratio, they can then both attain levels of output along the STOR line. This line lies above both of their no-trade PPFs and so both will realize significant gains from trade. As we will see in the section on terms of trade, there is no guarantee that Jeff and Jenn will agree upon terms that put them along this line, even if they specialize.

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