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Suppose that a worker in cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in oatland can grow either 5 bushels of corn or 50 bushels of oats per year. there are 20 workers in cornland and 20 workers in oatland. if the two countries do not trade, cornland will produce and consume 400 bushels of corn and 100 bushels of oats, while oatland will produce and consume 60 bushels of corn and 400 bushels of oats. if each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by

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Answer: Total output increase by 840 bushels.

Explanation: Opportunity cost of corn in Cornland = 10/40 = 0.25 bushels of oats  

Opportunity cost of oats in Cornland = 40/10 = 4 bushels of corn

Opportunity cost of corn in Oatland= 50/5 = 10 bushels of oats

Opportunity cost of oats in Oatland = 5/50 = 1/10 = 0.1 bushels of corn  

Opportunity cost of Corn is lower for Cornland. While opportunity cost of oats is lower in Oatland.  

Thus, Cornland will produce all corns and Oatland will produce all oats.  

Cornland produces 20*40 = 800 bushels of corn

Oatland produces 20*50= 1000 bushels of oats

Thus total output is 1800 bushels per year. While, earlier it was 460 bushels of corn and 500 bushels of wheat. Total output is 500+460 = 960 bushels per year.  

Thus, output increased by 840 bushels.  

chilljain33

Increase in production refers to a gradual increase in the number of units that could be produced during the course of production in the current period, as compared to the output of the previous period.

The correct statement is that the yearly output of the two countries will be increased by 840 bushels if the conditions given above are met for production of corns.

How to calculate the increase in production?

The formula for computation of the change in production can be done by simply comparing the outputs of the previous condition and the current condition.

It has been computed that the opportunity cost for corn in oatland is lower, and that of oats in cornland is also lower. Thus, the corns and oats will be produced in their respective farmlands.

So, the production after taking into account the given information will be done as,

[tex]\rm Corn\ Production= 20 x\ 40\\\\\rm Corn\ Production= 800\ bushels[/tex]

whereas, the production for oats will be as,

[tex]\rm Oats\ Production= 20 x\ 50\\\\\rm Oats\ Production= 1000\ bushels[/tex]

So, the total outcome is 1800 bushels. It has been given that the production in the earlier condition was 960 bushels per year.

So, the increase in production will be as,

[tex]\rm Increase\ in\ Production= New\ Production- Old\ Production\\\\\rm Increase\ in\ Production=1800-960\ bushels\\\\\rm Increase\ in\ Production=840\ bushels[/tex]

Hence, the correct statement is that the rate of production will be increased by 840 bushels per year if the given conditions are followed.

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