Suppose in Finland, a Worker Can Produce Either 32 Cell

question 113

Essay

Suppose in Finland, a worker can produce either 32 cell phones or 4 kayaks while in Canada, a worker can produce either 40 cell phones or 10 kayaks.
a.Which country has an absolute advantage in cell phone production? In kayak production?
b.What is the opportunity cost of 1 cell phone in Finland? In Canada?
c.What is the opportunity cost of 1 kayak in Finland? In Canada?
d.Which country has a comparative advantage in cell phone production? In kayak production?
e.Suppose each country has 1,000 workers.Currently, each country devotes 40 percent of its labor force to cell phone production and 60 percent to kayak production.What is the output of cell phones and kayaks for each country and what is the total output of cell phones and kayaks between the two countries?
f.Suppose each country specializes in the production of the good in which it has a comparative advantage.What is the total output of cell phones and kayaks in the two countries?
g.Provide a numerical example to show how Finland and Canada can both gain from trade.Assume that the terms of trade are established at 6 cell phones for 1 kayak.

---

Definitions:

Organizational Strategy

A plan of action designed to achieve a long-term or overall aim within an organization.

Designing Organizations

Designing organizations involves structuring and aligning the various parts of an organization in a way that matches its strategy, enhances efficiency, and facilitates management and operational processes.

Departmentalization

The process of dividing an organization into different departments or units, each specializing in a specific area of operation.

Organizational Structure

The system used to define a hierarchy within an organization, determining how roles, responsibilities, and authority are organized and how information flows between the levels of management.