Question

Suppose Malaysia's production possibilities include a maximum of 70 units of rice or 280 units of lumber, and Canada's production possibilities include a maximum of 140 units of rice or 140 units of lumber. Then suppose each country initially allocates 50% of its labor to producing each product. a) Total production by the two countries equals 105 105 Correct tons of rice and 210 210 Correct ft3 of lumber. b) Now suppose that Malaysia increases the labor it allocates to lumber by 10%. Its lumber production rises by 28 28 Correct and its rice production falls by 7 7 Correct . c) If Canada reallocates its labor to increase its rice production by exactly the amount that Malaysia's rice production fell, by how much must its lumber production fall? 5 5 Incorrect ft3 d) State the combined effects on total production of the reallocations in part b and c. Total production of rice changes by 105 105 Incorrect tons. (include a negative sign, if needed) Total production of lumber changes by 231 231 Incorrect ft3. (include a negative sign, if needed)

Answer 1

a). Total production by the two countries equals 105 tons of rice and 210 ft3 of lumber.

b). Its lumber production rises by 28 ft3and its rice production falls by 7 units.

c).lumber production fall by 7 units.

d).Total production of rice changes by 0 tons.

Total production of lumber changes by 21 ft3.