Question 71 pts
The terms of trade range is 1/5 X < 1Y < 3X
the closer the value of 1Y is to 3X the better for the buyer. |
the closer the value of 1Y is to 1/5 X the better for the buyer. |
the closer the value of 1 Y is to 1/5 X the more of the gains to trade go to the sellers. |
the closer the value of 1 Y is to 3 X the more of the gains to trade go to the buyers. |
Flag this Question
Question 81 pts
The justification for trade barriers economists are most likely to support is probably:
diversification, but only for economies dependent on one or two goods. |
cheap capital, but only for economies with low savings rates. |
national security, but only for superpowers. |
infant industry, but only for highly developed technological leaders. |
Question number 7 correct choice is the second option.
1/5 is the reservation price for the seller and 3 is the price for the buyer. If the market price is closer to the reservation price the consumer surplus will be larger than it will be better for the buyer.
Question number 8 correct choice is the second option.
Trade barriers are supported by economist on the grounds of national security for all Nations and similarly in infant industry for developing Nations. Besides it argues for cheap capital to be provided for economies with low savings rate.
Get Answers For Free
Most questions answered within 1 hours.