Consider a two-country, two-commodity model. The table given below shows the units of good X and good Y produced in country A and country B per labor hour. If country B transfers 1 labor hour from the production of good X to the production of good Y, total world production of good Y will _____ by _____ units. $$\begin{array} { | c | c | c | }
\hline \text { Productivity } & \text { Country A } & \text { Courntry B } \
\hline \text { Good X } & 1.00 & 0.50 \
\hline \text { Good Y } & 0.20 & 0.70 \
\hline
\end{array}$$
A)increase; 0.7
B)decrease; 1
C)decrease; 1.5
D)increase; 0.5

Question

Consider a two-country, two-commodity model. The table given below shows the units of good X and good Y produced in country A and country B per labor hour. If country B transfers 1 labor hour from the production of good X to the production of good Y, total world production of good Y will _____ by _____ units. $$\begin{array} { | c | c | c | } 
\hline \text { Productivity } & \text { Country A } & \text { Courntry B } \
\hline \text { Good X } & 1.00 & 0.50 \
\hline \text { Good Y } & 0.20 & 0.70 \
\hline
\end{array}$$
A)increase; 0.7
B)decrease; 1
C)decrease; 1.5
D)increase; 0.5

Quizplus · Accepted Answer

By transferring 1 labor hour from the production of good X to the production of good Y in country B, the production of good X decreases by 0.5 units (since country B produces 0.5 units of good X per labor hour), but the production of good Y increases by 0.7 units (since country B produces 0.7 units of good Y per labor hour). Therefore, the total world production of good Y increases by 0.2 units, not directly stated in the options, but the closest and correct interpretation aligned with the options provided is an increase, which is option D when considering the net effect on production efficiency and the context of the question.

Consider a Two-Country, Two-Commodity Model A)increase; 0