Table 19-12
Output per hour Production and Production
of work Consumption without Trade with Trade
$\begin{array}{|c|c|c|c|c|c|c|}
\hline & \text { Swords } & \text { Belts } & \text { Swords } & \text { Belts } & \text { Swords } & \text { Belts } \
\hline \text { Estonia } & 5 & 3 & 100 & 40 & 200 & 0 \
\hline \text { Morocco } & 2 & 2 & 60 & 60 & 0 & 120 \
\hline
\end{array}$ Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 19-12 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-12.If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded,how many swords will Estonia gain compared to the "without trade" numbers?

Question

Table 19-12
Output per hour Production and Production
of work Consumption without Trade with Trade
 $\begin{array}{|c|c|c|c|c|c|c|}
\hline & \text { Swords } & \text { Belts } & \text { Swords } & \text { Belts } & \text { Swords } & \text { Belts } \
\hline \text { Estonia } & 5 & 3 & 100 & 40 & 200 & 0 \
\hline \text { Morocco } & 2 & 2 & 60 & 60 & 0 & 120 \
\hline
\end{array}$ Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 19-12 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-12.If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded,how many swords will Estonia gain compared to the "without trade" numbers?

Quizplus · Accepted Answer

With the given terms of trade, Estonia will export swords and import belts. Therefore, Estonia's production will shift from 200 swords and 0 belts to 175 swords and 50 belts. Similarly, Morocco's production will shift from 60 swords and 60 belts to 85 swords and 10 belts.

Without trade, Estonia produced 100 swords and 120 belts. With trade, Estonia produces 175 swords and consumes only 30 belts (50 belts were imported). Therefore, Estonia gains 75 swords (175-100) and loses 90 belts (120-30) compared to the scenario without trade.

Hence, the net gain for Estonia in terms of swords is 75-50 = 25 swords.

Table 19-12 Output Per Hour Production and Production of Work

Table 19-12
Output Per Hour Production and Production
of Work