Suppose That a Worker in Freedonia Can Produce Either 6

question 94

Multiple Choice

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.For many years the two countries traded,each completely specializing according to their respective comparative advantages.Now,however,war has broken out between them and all trade has stopped.Without trade,Freedonia produces and consumes 30 units of corn and 10 units of wheat per year.Sylvania produces and consumes 10 units of corn and 30 units of wheat.The war has caused the combined yearly output of the two countries to decline by

• A)10 units of corn and 10 units of wheat.
• B)20 units of corn and 20 units of wheat.
• C)30 units of corn and 30 units of wheat.
• D)40 units of corn and 40 units of wheat.

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Definitions:

Theory of Education

The Theory of Education explores the processes and factors influencing learning, teaching, and the overall educational system.

Innate Productivity

The natural or inherent ability of an individual, firm, or country to produce goods and services efficiently.

Above-Equilibrium Wage

A wage rate set above the market equilibrium, where the quantity of labor supplied exceeds the quantity of labor demanded, often leading to unemployment.

Cartel

An association of independent businesses organized to control production, pricing, and marketing of goods to restrict competition.