Question

2-7

2.Based on Figure 4.1, in autarky, Canada will produce at point __________ and consume at point __________.

Figure 4.1 Wheat, - - und ----------- ------- + International Price = 0.25W/C - - - - - i Price = 1W/C -- Cloth Canada

  

S0; C0

   

S0; C1

   

S1; C0

   

S1; C1

Question 3

1 / 1 pts

Based on Figure 4.1, after the opening up of international trade, Canada will produce at point __________ and consume at point __________.

  

S0; C1

   

S1; C1

   

S0; C0

   

S1; C0

Question 4

1 / 1 pts

Based on Figure 4.1, Canada has a comparative advantage in which good?

  

Cloth.

   

Neither wheat nor cloth.

   

Both wheat and cloth.

   

Wheat.

Question 5

1 / 1 pts

Based on Figure 4.1, after the opening up of international trade, Canada will export __________ units of wheat and import __________ units of cloth.

  

60; 15

   

20; 80

   

0; 0

   

20; 5

Question 6

1 / 1 pts

Based on Figure 4.1, after the opening up of international trade, Canada will import __________ units of wheat and export __________ units of cloth.

  

0; 0

   

25; 25

   

30; 65

   

65; 65

Question 7

1 / 1 pts

Based on Figure 4.1, before the opening up of international trade, 1 unit of wheat will trade for __________ units of cloth. After the opening up of international trade, 1 unit of wheat will trade for __________ units of cloth.

  

0; 2.5.

   

1; 0.25

   

4; 1.

   

1; 4.

Answer 1

2. S0; C0
(Before trade, consumption = production.)

3. S1; C1
(After trade, Canada produces at S1 and consumes outside PPF at C1.)

4. Wheat
(As Canada is consuming lesser wheat(60) than it is producing(80), so, it has comparative advantage in wheat.)

5. 20; 80
(Canada exports wheat = 80 - 60 = 20; import cloth = 20/0.25 = 80)

6. 0; 0
(Because it exports wheat and import cloth.)

7. 1; 4.
(Before trade, 1 unit of wheat = 1 unit of cloth. After trade 20 units of wheat = 80 units of cloth. So, 1 unit of wheat= 80/20 = 4 units of cloth.)