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 ____ ft^3 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?

If Malaysia increases the labor it allocates to lumber by 10%. Its lumber production rises by 28 units and its rice production falls by 7 units.

Lumber production in Canada would fall by 14 units.

What is the total production in both countries?

Rice = (50% x 70) + (50% x 140)

= 35 + 70

= 105

Lumber = (50% x 280) + (50% x 140)

140 + 70

= 210

What is the decrease in rice production when Malaysia increases lumber production by 10%?

Rice production after the decrease = (50% - 10%) x 70

= 40% x 70

= 0.40 x 70

= 28

Decrease = 35 - 28 = 7.

What is the fall in lumber production in Canada?

Total increase in rice production in Canada = 70 + 7 = 77

Total percentage increase (77/70) - 1 = 10%

Percentage decrease in lumber production = 50 - 10 = 40%

40% x 140 = 56

Decrease = 70 - 56 = 14.

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