Table 2-31 -Refer to Table 2-31 CIf the Two Countries Do Not Trade and Consume Whatever

question 276

Essay

Table 2-31
$\begin{array}{|l|c|c|}\hline & \text { Cell Phone } & \text { Lumber (board foot) } \\\hline \text { Estonia } & 20 \text { hours } & 5 \text { hours } \\\hline \text { Finland } & 18 \text { hours } & 4 \text { hours }\\\hline\end{array}$
-Refer to Table 2-31.This table shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland.
a.If each country has a total of 3,600 labor hours to devote to the production of the two goods,draw the production possibilities frontier for each country.Put "Cell Phone" on the horizontal axis and "Lumber" on the vertical axis.Be sure to identify the intercept values on your graphs.
b.Suppose each country allocates 55% its labor hours to lumber production and 45% to the production of cell phones.Complete Table 2-34 below to show each country's output of the two products.
Table 2-32: Production and Consumption with no Trade
$\begin{array}{|l|c|c|}\hline & \begin{array}{c}\text { Cell Phone } \\\text { Output }\end{array} & \begin{array}{c}\text { Lumber Output } \\\text { (board feet) }\end{array} \\\hline \text { Estonia } & & \\\hline \text { Finland } & & \\\hline \text { Total } & &\\\hline\end{array}$
c.If the two countries do not trade and consume whatever they produce,identify the current production and consumption point for each country on their respective production possibilities frontiers.Label Estonia's consumption point "E" and Finland's consumption point,"F."
d.Suppose the two countries specialize and trade.Who should produce cell phones and who should produce lumber? Explain your answer.
e.Complete Table 2-35 below to show each country's output with specialization.
Table 2-33: Output with Specialization
$\begin{array}{|l|c|c|}\hline & \begin{array}{c}\text { CellPhone } \\\text { Output }\end{array} & \begin{array}{c}\text { Lumber Output } \\\text { (board feet) }\end{array} \\\hline \text { Estonia } & & \\\hline \text { Finland } & & \\\hline \text { Total } & &\\\hline\end{array}$
f.Did specialization increase the combined output for the two countries without any increase in resources? If so,by how much?
g.Suppose Estonia and Finland agree to trade so that in exchange for 400 board feet of lumber,the exporter of lumber receives 90 cell phones.Complete Table 2-36 below to show each country's consumption bundle after trade.
Table 2-34: Consumption with Trade
$\begin{array}{|l|l|c|} \hline& \text { Cell Phone } & \begin{array}{c}\text { Lumber } \\\text { (boardfeet) }\end{array} \\\hline \text { Estonia } & & \\\hline \text { Finland } & &\\\hline\end{array}$
h.Show the consumption points after trade on each country's production possibilities frontier.Label these points "X" for Estonia and "Y" for Finland.
i.Has trade made the two countries better off? Explain your answer

---

Definitions:

God Existed

A statement that affirms the existence of a supreme being or deity.

Tabula Rasa

(Latin.) In Locke, the “blank tablet” metaphor of the mind, in opposition to the doctrine that there are innate ideas. In other words, the mind is a “blank” at birth, and everything we know must be “stamped in” through experience.

Innate Ideas

Innate Ideas are concepts or knowledge presumed to be present in the mind at birth, not derived from experience but innate in the human mind.

John Locke

A 17th-century English philosopher known for his work in political philosophy, empiricism, and social contract theory.