Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Suppose Country A specializes in bananas, and Country B specializes in tomatoes. The limits to the terms of trade that Country A would find acceptable are Country A will give no:
A. more than 5 bananas for each tomato.
B. less than 5 bananas for each tomato.
C. more than 1 tomato for every 5 bananas.
D. less than 1 tomato for every 5 bananas.
A. more than 5 bananas for each tomato.
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The measure of the aggregate price level that is most frequently reported in the media is the
A) GDP deflator. B) producer price index. C) consumer price index. D) household price index.
If product prices were stated in terms of gallons of milk, then milk would be functioning primarily as:
A. legal tender. B. a unit of account. C. fiat money. D. a store of value.
A rationale used for tariff protection by some is that
A) the country wants to practice international price discrimination. B) the country finds its cost of producing their products higher than in other countries. C) imports are produced by firms that received subsidies from their governments. D) imports are produced by firms that are more efficient than domestic producers are.
After trade opens, the short run impact on the income of the variable factor will be
A) a decrease. B) an increase. C) zero. D) indeterminate, depending on the consumption pattern of the owners of the variable factor.