Question

Question 71 pts

When country X imports goods from country Y,

only country X benefits.

only country Y benefits.

both country X and country Y benefit.

neither country X nor country Y benefit.

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Question 81 pts

Country X

   wheat:     0     3      6      9      12
   lumber:    4     3      2      1       0

Country Y

    wheat:    0      1      2       3      4
    lumber:   8      6      4       2      0

Before specialization and trade, when both countries are in the middle total production of lumber would be 4 units.

Before specialization and trade, when both countries are in the middle total production of lumber would be 8 units.

Before specialization and trade, when both countries are in the middle total production of lumber would be 6 units.

Before specialization and trade, when both countries are in the middle total production of lumber would be 14 units.

Answer 1

Question 71:

Both country X and country Y benefit.

It is same as the demand-supply analysis because consumer demand (Imports) only if there is consumer surplus and producer sell (Exports) only is there is producer surplus. Without exports, no one can imports so that mutual trade is beneficial then the only trade is possible.

Question 81:

Due to comparative advantage analysis, Country Y can produce maximum lumbers and Country X can produce max. wheat so that maximum lumber which is produced by country Y is 8 units.