Suppose That a Worker in Boatland Can Produce Either 5

question 2

Multiple Choice

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year,and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year.There are 10 workers in each country.Political pressure from the fish lobby in Farmland and from the wheat lobby in Boatland has prevented trade between the two countries on the grounds that cheap imports would kill the fish industry in Farmland and the wheat industry in Boatland.As a result,Boatland produces and consumes 25 units of wheat and 125 units of fish per year while Farmland produces and consumes 125 units of wheat and 25 units of fish per year.If the political pressure were overcome and trade were to occur,each country would completely specialize in the product in which it has a comparative advantage.If trade were to occur,the combined output of the two countries would increase by

• A)25 units of wheat and 25 units of fish.
• B)50 units of wheat and 50 units of fish.
• C)75 units of wheat and 75 units of fish.
• D)100 units of wheat and 100 units of fish.

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Definitions:

Partnership Agreement

A legal document outlining the terms, conditions, and obligations of each partner in a business partnership.

Total Investment

Refers to the cumulative sum of money invested in a particular asset or portfolio over a period of time.

Canadian Dollar

The official currency of Canada, symbolized as CAD in the foreign exchange market.

87.5%

A numerical value representing 87.5 parts out of 100; often used in statistical or financial contexts.