Question

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 ei ther 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. 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. Suppose that trade is then initi ated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Sylvania will now be able to consume a maximum of

a.30 units of corn and 30 units of wheat.
b. 40 units of corn and 30 units of wheat.
c. 40 units of corn and 20 units of wheat.
d. 10 unites of corn and 40 units of wheat.

Answer 1

A. 30 units of corn and 30 units of wheat

Step-by-step explanation:

If Sylvania dedicates its entire laborforce to the sole production of wheat (because it is most efficient in that) it would produce 60 units of wheat per year (10 workers * 6 units of wheat per year), then it would change 30 units of that wheat for 30 units of Corn with Freedonia.

So it would be abe to consume a maximum of 30 units of corn (traded) and the 30 units of wheat that werent traded.