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Sweden has 400 workers and 600 machines. Italy has 400 workers and 400 machines. Factor requirements per unit of output are fixed as follows: workers

Sweden has 400 workers and 600 machines. Italy has 400 workers and 400 machines. Factor requirements per unit of output are fixed as follows:

workers

machines

Ball bearings

4

10

Shoes

6

5

Calculate each country's full employment output combination. Suppose that demand conditions are the same in both countries and that free trade leaves them at their full-employment output points. Which country will export shoes? Illustrate your answer using transformation curves and trade triangles.

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