Question

Assume that England and Spain each has 40 labor hours available. Originally, each country divided its time equally between the production of cheese and bread. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of cheese increased by

Answer 1

Answer:

Multiple of 2

Explanation:

This is because the two countries are producing at a more increased rate than before. so the output of cheese will be more than it was before the sole focus on its production.

Answer 2

Answer:

15

Explanation:

                Hrs to Make 1 Unit of         Units Produced in 40 Hours

                  Cheese    Bread                         Cheese     Bread

England       1                 4                                  40              10

Spain           4                8                                   10               5

• England's opportunity cost of producing cheese over bread = 10/40 = 0.25 breads per cheese
• England's opportunity cost of producing bread over cheese = 40/10 = 4 cheeses per bread
• Spain's opportunity cost of producing cheese over bread = 5/10 = 0.5 breads per cheese
• Spain's opportunity cost of producing bread over cheese = 10/5 = 2 cheeses per bread

Originally England produced 20 cheeses and 5 breads, while Spain produced 5 cheeses and 2.5 breads.

• total cheese production = 25
• total bread production = 7.5

Since England has the comparative advantage of producing cheese and Spain of producing bread, total cheese production will increase to 40 (15 units more than before), while bread production will be 5.