Production of a catheter in the U.S. requires either one skilled worker-day or two unskilled worker-days, while production of the same device in Guatemala, because of its relative lack of transportation and communications infrastructure, requires either three skilled worker-days or four unskilled worker-days. Production of a hammock in the U.S. requires one-fourth skilled worker-day or one-third unskilled worker-day, while production of a hammock in Guatemala requires one-third skilled worker-day or one unskilled worker day. If one hundred unskilled worker-days are moved from producing hammocks to producing catheters in the U.S., while one hundred twenty skilled worker-days are moved from producing catheters to producing hammocks in Guatemala, combined production of the two goods in the
two countries will change by
A. no net change in production of the two goods would occur.
B. five additional catheters and thirty fewer hammocks.
C. thirty additional catheters and five additional hammocks.
D. ten additional catheters and sixty additional hammocks.
Answer: D
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A. not change. B. decrease. C. increase. D. depend on supply.
In a business cycle, the period between the high point of economic activity and the following low point is called
A. an expansion B. inflation C. stagflation D. a recession
The overall money supply would tend to increase if the Fed were to
A) increase the required reserve ratio. B) increase the discount rate. C) buy government bonds. D) exchange crisp dollar bills for worn and tattered dollar bills.
The Rule of 70 is used to
A) estimate how much of an economy's growth rate is due to increases in capital per hour of labor. B) calculate the standard of living. C) calculate the economy's growth rate. D) estimate how long it will take the level of any variable to double.