Question

Suppose Malaysia's production possibilities include a maximum of 80 units of rice or 120 units of lumber, and Canada's production possibilities include a maximum of 160 units of rice or 60 units of lumber. Then suppose each country initially allocates 50% of its labor to producing each product.

a) Total production by the two countries equals  tons of rice and   ft³ of lumber.

b) Now suppose that Malaysia increases the labor it allocates to lumber by 10%. Its lumber production rises by  and its rice production falls by  .

c) If Canada reallocates its labor to increase its rice production by exactly the amount that Malaysia's rice production fell, by how much must its lumber production fall?     ft³

d) State the combined effects on total production of the reallocations in part b and c.

Total production of rice changes by  tons. (include a negative sign, if needed)

Total production of lumber changes by  ft³.   (include a negative sign, if needed)

Answer 1