a. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. Assuming constant costs, Big Country needs to give up multiple choice: A) 1 unit of Y for 1 unit of X and should produce good X. Small Nation needs to give up 3/4 of a unit of X for 1 unit of Y and should produce good Y. B) 3/4 of a unit of Y for 1 unit of X and should produce good Y. Small Nation needs to give up 1 unit of X for 1 unit of Y and should produce good X. C) 3/4 of a unit of Y for 1 unit of X and should produce good X. Small Nation needs to give up 1 unit of X for 1 unit of Y and should produce good Y. D) 1 unit of Y for 1 unit of X and should produce good Y. Small Nation needs to give up 3/4 of a unit of X for 1 unit of Y and should produce good X.
a. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. Assuming constant costs, Big Country needs to give up multiple choice: A) 1 unit of Y for 1 unit of X and should produce good X. Small Nation needs to give up 3/4 of a unit of X for 1 unit of Y and should produce good Y. B) 3/4 of a unit of Y for 1 unit of X and should produce good Y. Small Nation needs to give up 1 unit of X for 1 unit of Y and should produce good X. C) 3/4 of a unit of Y for 1 unit of X and should produce good X. Small Nation needs to give up 1 unit of X for 1 unit of Y and should produce good Y. D) 1 unit of Y for 1 unit of X and should produce good Y. Small Nation needs to give up 3/4 of a unit of X for 1 unit of Y and should produce good X.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
a. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. Assuming constant costs, Big Country needs to give up
multiple choice:
A) 1 unit of Y for 1 unit of X and should produce good X. Small Nation needs to give up 3/4 of a unit of X for 1 unit of Y and should produce good Y.
B) 3/4 of a unit of Y for 1 unit of X and should produce good Y. Small Nation needs to give up 1 unit of X for 1 unit of Y and should produce good X.
C) 3/4 of a unit of Y for 1 unit of X and should produce good X. Small Nation needs to give up 1 unit of X for 1 unit of Y and should produce good Y.
D) 1 unit of Y for 1 unit of X and should produce good Y. Small Nation needs to give up 3/4 of a unit of X for 1 unit of Y and should produce good X.
b. Suppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. The limits of the terms of trade between these two countries will be
multiple choice:
A) 4/3 units of Y and 3/4 of a unit of X.
B) 3/4 of a unit of Y and 4/3 units of X.
C)1 unit of Y and 1 unit of X.
D) between 1 unit of good X for a unit of good Y and 4/3 units of good X for a unit of good Y.
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