51. Which statement(s) below is (are) TRUE? A As economic development proceeds and the terms of trade for the agricultural sector fall, the prices of agricultural goods fall relative to the prices of industrial goods. B The opportunity cost of educating the children of farming families is lower at planting and harvest time. C In labor-abundant economies such as China and India, technological development emphasizes high-yielding seed varieties and the more intensive use of water and fertilizers. U C A

51. Which statement(s) below is (are) TRUE? A As economic development proceeds and the terms of trade for the agricultural sector fall, the prices of agricultural goods fall relative to the prices of industrial goods. B The opportunity cost of educating the children of farming families is lower at planting and harvest time. C In labor-abundant economies such as China and India, technological development emphasizes high-yielding seed varieties and the more intensive use of water and fertilizers. U C A

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 31P: Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil...

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Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil and tons of lumber the workers can produce. Use these numbers to answer the rest of this question. Draw a production possibilities frontier for each country. Assume there are 100 workers in each country. Canadians and Venezuelans desire both oil and lumber. Canadians want at least 2,000 tons of lumber. Mark a point on their production possibilities where they can get at least 3,000 tons. Assume that the Canadians specialize completely because they figured out they have a comparative advantage in lumber. They are willing to give up 1,000 tons of lumber. How much oil should they ask for in return for this lumber to be as well off as they were with no trade? How much should they ask for if they want to gain from trading with Venezuela? Note: We can think of this ask as the relative price or trade price of lumber. Is the Canadian ask you identified in (b) also beneficial for Venezuelans? Use the production possibilities frontier graph for Venezuela to show that Venezuelans can gain from trade.