Table 2-5
Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland.
-Refer to Table 2-5.If the two countries specialize and trade,who should export lumber?
A)There is no basis for trade between the two countries.
B)Estonia
C)Finland
D)They should both be exporting lumber.

Question

Table 2-5
  Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland.
-Refer to Table 2-5.If the two countries specialize and trade,who should export lumber?
A)There is no basis for trade between the two countries. 
B)Estonia 
C)Finland 
D)They should both be exporting lumber.

Quizplus · Accepted Answer

Finland should export lumber because it has a lower opportunity cost in lumber production compared to Estonia. Finland can produce 4 board feet of lumber in one hour, while Estonia can produce only 2.5 board feet in one hour. Thus, Finland has a comparative advantage in lumber production and should specialize in it and trade with Estonia for cell phones.

Table 2-5 Table 2-5 Shows the Number of Labor Hours