Consider the example of trade between the United States and Mexico described in the tables below.
Country # of workers needed to
produce 1,000 units- Shoes # of workers needed to
produce 1,000 units- TVs
United States 6 workers 1 worker
Mexico 8 workers 5 workers
Total Production Before Trade
Country Current Shoe Production Current TV Production
United States 10,000 60,000
Mexico 7,500 12,000
Total 17,500 72,000
Suppose that each country currently has 120 workers and each decides to transfer some amount of labor toward its area of comparative advantage. The United States transfers 30 workers away from shoes toward producing TVs. Mexico transfers 50 workers away from TVs toward producing shoes.
What will be the new total output of TVs for both countries combined?
