The following table indicates the hourly production possibilities of maple syrup

Question

    
                                 The following table indicates the hourly production possibilities of maple syrup, shoes, and light bulbs in the United States, Canada, and Mexico. For example, workers in the United States can produce either three pints of maple syrup, three pairs of shoes, or six light bulbs in one hour.                     

                     Maple Syrup
(Pints per hour) Shoes
(Pairs per hour) Light Bulbs
(Bulbs per hour) United States 3 3 6 Canada 2 1 1 Mexico 1 2 1      The following table indicates the hourly production possibilities of maple syrup, shoes, and light bulbs in the United States, Canada, and Mexico. For example, workers in the United States can produce either three pints of maple syrup, three pairs of shoes, or six light bulbs in one hour. Suppose you find that under free trade each of these countries specializes in the production of only one good. (Assume, to make things simple, that these are the only three countries in the world and that shoes, maple syrup, and light bulbs are the only goods.) Given the data on worker productivities, you can predict that the United States should specialize in _________, Canada should specialize in _________, and Mexico should specialize in __________. (Hint: Pick a single good such as shoes to use as the measure of cost. Calculate the opportunity cost of producing maple syrup and light bulbs in terms of shoes. Use this information to predict which countries specialize in light bulbs and maple syrup. What must the other country produce for it to be able to trade with the other two?)

Explanation / Answer

United States should specialize in Light bulbs, Canada should specialize in Maple syrup, and Mexico should specialize in shoes.

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