Initially, before these countries begin trading goods, Bertlanduses 1 million ho
ID: 1253082 • Letter: I
Question
Initially, before these countries begin trading goods, Bertlanduses 1 million hours of labor per week to produce clothing and 3million hours per week to produce wheat, while Ernamia uses 3million hours of labor per week to produce clothing and 1 millionhours per week to produce wheat. Assume there are no othercountries willing to trade goods, so when there is no trade betweenthese two countries, each country consumes the amount of wheat andclothing it produces.
Consider two neighboring islandcountries called Bertland and Ernamia. They each have 4 millionlabor hours available per week that they can use to produce wheat,clothing, or a combination of both. The table below shows theamount of wheat or clothing that can be produced using one hour oflabor.
Wheat
(Bushels) Clothing
(Garments) Bertland 4 5 Ernamia 6 3
Initially, before these countries begin trading goods, Bertlanduses 1 million hours of labor per week to produce clothing and 3million hours per week to produce wheat, while Ernamia uses 3million hours of labor per week to produce clothing and 1 millionhours per week to produce wheat. Assume there are no othercountries willing to trade goods, so when there is no trade betweenthese two countries, each country consumes the amount of wheat andclothing it produces.
Explanation / Answer
D. 5 million bushels; 9 million garments