Suppose Malaysia’s production possibilities include a maximum of 70 units of rice or 280 units of lumber, and Canada’s production possibilities include a maximum of 140 units of rice or 140 units of lumber. Then suppose each country initially allocates 50% of its labor to producing each product. a. Total production by the two countries equals tons of rice and ft3 of lumber.
b. Now suppose that Malaysia increases the labor it allocates to lumber by 10%. Its lumber production rises by and its rice production falls by.
c. If Canada reallocates its labor to increase its rice production by exactly the amount that Malaysia’s rice production fell, by how much must its lumber production fall? ft3
d. State the combined effects on total production of the reallocations in part b and c.