Question

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year and a worker in Teeveeland can produce either 2 radios or 5 televisions per year. Each nation has 100 workers. If Radioland trades 100 televisions to Teeveeland in exchange for 100 radios each year, then each country's consumption of new radios and televisions per year will be
a. 100 radios, 300 televisions in Radioland and 300 radios, 100 televisions in Teeveeland.b. 300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland.c. 200 radios, 100 televisions in Radioland and 100 radios, 200 televisions in Teeveeland.d. 300 radios, 100 televisions in Radioland and 100 radios, 400 televisions in Teeveeland.

Answer 1

Answer:

b.  300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland.

Explanation:

Radioland produce 4*100 = 400 radios

Teeveeland produce 4*100 = 400 TVs

 If Teeveeland produces only Teevees and radioland only radios (I think this is what he question suggests by "Also supposethat each country completely specializes in producing the good in which it has a comparative advantage") then Answer is as follows

Hence max consumption of Radioland = 300 radios + 100TVs

Hence max consumption of Teeveeland = 100 radios + 300TVs

Hence, 300 televisions and 100 radios in Teeveeland and 300 radios and 100 televisions in Radioland. that is option B is correct.