Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Then suppose that trade is initiated between the two countries (which means each country produces the good in which they have comparative advantage), and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. What maximum amounts will Freedonia now be able to consume? 30 units of corn and 30 units of wheat.

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Then suppose that trade is initiated between the two countries (which means each country produces the good in which they have comparative advantage), and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. What maximum amounts will Freedonia now be able to consume? 30 units of corn and 30 units of wheat.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

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Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of
wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units
of wheat per year. Each nation has 10 workers. Then suppose that trade is initiated
between the two countries (which means each country produces the good in which
they have comparative advantage), and Freedonia sends 30 units of corn to Sylvania
in exchange for 30 units of wheat. What maximum amounts will Freedonia now be
able to consume?
30 units of corn and 30 units of wheat.
60 units corn and no wheat.
no corn and 40 units of wheat.
no corn and 50 units of wheat.

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