Assume that one day's labor in England can produce either 20 units of cloth or 2 units of wine, while in Portugal, one day's labor can produce either 24 units of cloth or 12 units of wine. If England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit of labor from cloth to wine, the increase in combined output by those two workers will be

Question

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Before the transfers, England produces 40 units of cloth (2 workers * 20 units of cloth per worker) and 4 units of wine (2 workers * 2 units of wine per worker). After transferring 2 units of labor from wine to cloth, England will produce 60 units of cloth (2 workers * 30 units of cloth per worker) and 2 units of wine (2 workers * 1 unit of wine per worker).

Before the transfers, Portugal produces 48 units of cloth (2 workers * 24 units of cloth per worker) and 24 units of wine (2 workers * 12 units of wine per worker). After transferring 1 unit of labor from cloth to wine, Portugal will produce 36 units of cloth (1 worker * 36 units of cloth per worker) and 36 units of wine (3 workers * 12 units of wine per worker).

Therefore, the combined output after the transfers will be 98 units of cloth (60 from England + 36 from Portugal + 2 unused) and 38 units of wine (36 from Portugal + 2 from England). The increase in output is 16 units of wine and 16 units of cloth, so the answer is D.

Assume That One Day's Labor in England Can Produce Either