Solution-Combined output of the two countries

Combined output of the two countries

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Reference no: EM131974108

A worker in Lakeland can produce either 5 units of wheat or 30 units of fish per year, and a worker in Hillcountry can produce either 30 units of wheat or 5 units of fish per year. There are 10 workers in each country. Political pressure from the fish lobby in Hillcountry and from the wheat lobby in Lakeland has prevented trade between the two countries on the grounds that cheap imports would kill the fish industry in Hillcountry and the wheat industry in Lakeland. As a result, Lakeland produces and consumes 25 units of wheat and 150 units of fish per year while Hillcountry produces and consumes 150 units of wheat and 25 units of fish per year. If the political pressure were overcome and trade were to occur, each country would completely specialize in the product in which it has a comparative advantage. If trade were to occur, the combined output of the two countries would increase by

50 units of wheat and 50 units of fish.

100 units of wheat and 100 units of fish.

75 units of wheat and 75 units of fish.

125 units of wheat and 125 units of fish.

150 units of wheat and 150 units of fish.

Reference no: EM131974108

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Combined output of the two countries

Reference no: EM131974108

Reference no: EM131974108

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