Suppose Country X produces only two goods, food and clothing. At the initial free-trade equilibrium, the country produced 40 units of food and 20 units of clothing, and it exports 10 units of food and imports 10 units of clothing. Now suppose technological innovation in Country X leads to a balanced growth while leaving the relative prices of food and clothing unchanged in the international market. Production of food in Country X rises to 50 units and production of clothing rises to 25 units. If consumption of food rises to 42 units, we can most reasonably conclude that the
A. consumption of clothing rises to 32 units.
B. the size of Country X's trade triangle has increased.
C. consumers in Country X are worse off.
D. Country X's willingness to trade declines.
Answer: D
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Examining the conditions that could lead to unemployment in an economy is an example of a microeconomic topic
Indicate whether the statement is true or false
You are hired as a production analyst at Monopoly-R-Us and you estimate that, at current output, demand is inelastic and marginal cost is positive. You advise your superiors that they can increase profit by
a. raising price until demand becomes unit elastic b. raising price into the elastic range c. lowering price until demand becomes unit elastic d. lowering price into the elastic range e. reduce output without changing price
If the rate of job finding rises, the natural rate of unemployment will:
A. remain constant. B. increase. C. decrease. D. rise or decline, depending on the rate of job separation.
The aggregate demand curve slopes:
A. downward, like individual supply curves. B. upward, like individual supply curves. C. downward, like individual demand curves. D. upward, like individual demand curves.