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Thread: what the??

  1. #1
    Oct 2013
    san jose CA

    what the??

    how do they get 20 as the answer? I keep on getting 80??

    Table 3-2
    Assume that Aruba and Iceland can switch between producing coolers and producing radios at a constant rate.
    Labor Hours Needed to Make 1
    Cooler Radio
    Aruba 2 5
    Iceland 1 4
    Refer to Table 3-2. Assume that Aruba and Iceland each has 80 labor hours available. Originally, each country divided its time equally between the production of coolers and radios. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of coolers increased by
    a. 60.
    b. 20.
    c. 40.
    d. 80.
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  2. #2
    MHF Contributor
    Nov 2010

    Re: what the??

    Originally, Aruba and Iceland each spent 40 hours producing coolers. So, Aruba produced $\displaystyle \dfrac{40}{2}$ coolers while Iceland produced $\displaystyle \dfrac{40}{1}$ coolers. Now, Aruba produces 0 coolers and Iceland produces 80 coolers. The total output of coolers went from 20+40 = 60 to 80 for a difference of 20.
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