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kolezko [41]
3 years ago
12

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can

produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Freedonia will now be able to consume a maximum of:________
a. 30 units of corn and 30 units of wheat.
b. 40 units of corn and 30 units of wheat.
c. 40 units of corn and 20 units of wheat.
d. 10 units of corn and 40 units of wheat.
Business
1 answer:
Svetradugi [14.3K]3 years ago
3 0

Answer:

a. 30 units of corn and 30 units of wheat.

Explanation:

In a two-product, two-country world, international trade leads to specialization. Each country will produce the product in which it has comparative advantage. In this case, Freedonia will produce only corn and Sylvania will produce only wheat. With all constant, the country will consume the same amount of that product, but the surplus will exchange it for the other product. Freedonia will use all its workers to produce corn, in a year they will produce 6*10= 60 units of corn. Sylvania will use the 10 workers to produce wheat, in a year they will produce 6*10=60 units of wheat.

But, Freedonia will consume the same amount of corn (30 units). Then, Freedonia have 30 available units to trade with Sylvania. And the same for Sylvania, they will consume the same amount of wheat (30 units) and so Sylvania will have 30 available units of wheat to trade with Freedonia.

If the price, for both goods, is the same, Ricardo´s theory predicts that total consumption in both countries will increase, then consumer welfare will increase. Freedonia will consume the same 30 units of corn, but the other 30 will be exchanged by 30 units of wheat. Consumers are better and happier. Freedonia will consume 20 units more of wheat than before without sacrifying units of corn.

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Answer:

PED = - 1

Explanation:

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The tables show the annual incomes for the citizens in two countries, Melka and Sorare. Use this information to answer the quest
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The closer to zero the Gini coefficient is, the more equitable the income in a country is. Simply put, if more people in a nation have similar levels of income, the Gini coefficient will be smaller.

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Dennis_Churaev [7]

Answer:

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A positive externality occurs when the transaction between a producer and end user benefits a third party that did not take art in the process.

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A negative externality happens when the business transaction between a manufacturer and consumer affects a third party adversely. a typical example is cigarettes. When cigarettes is consumed by the end user, the smoke can affect the health of a third party that was not part of the initial transaction.

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