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.

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Definitions:

Statute of Limitations

A regulation establishing the longest period after an occurrence within which legal actions must be started.

Malpractice

Failure by a professional person, such as a doctor or lawyer, to perform his or her duties competently, resulting in harm to a client or patient.

Metal Fabrication

The process of building machines and structures from raw metal materials, including cutting, bending, and assembling processes.

Negligent Omissions

Failures to act with the level of care that someone of ordinary prudence would have exercised under the same circumstances, often leading to harm or loss.