Refer to the accompanying production possibilities tables. Data are in millions of units. Suppose that each nation specialized in producing the product for which it has a comparative advantage and the terms of trade were set at 3 units of chemicals for 1 unit of autos. In this case, Germany could obtain and consume a maximum combination of 8 million units of autos and
Refer to the accompanying production possibilities tables. Data are in millions of units. Suppose that each nation specialized in producing the product for which it has a comparative advantage and the terms of trade were set at 3 units of chemicals for 1 unit of autos. In this case, Germany could obtain and consume a maximum combination of 8 million units of autos and
Chapter28: International Trade And Finance
Section: Chapter Questions
Problem 1SQP
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Question
| Germany Production Possibilities | ||||||
| (Production Alternatives) | ||||||
| Product | A | B | C | D | E | F |
| Autos | 0 | 4 | 8 | 12 | 16 | 20 |
| Chemicals | 40 | 32 | 24 | 16 | 8 | 0 |
| U.S. Production Possibilities | ||||||
| (Production Alternatives) | ||||||
| Product | A | B | C | D | E | F |
| Autos | 0 | 3 | 6 | 9 | 12 | 15 |
| Chemicals | 60 | 48 | 36 | 24 | 12 | 0 |
Refer to the accompanying production possibilities tables. Data are in millions of units. Suppose that each nation specialized in producing the product for which it has a
Multiple Choice
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12 million units of chemicals.
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24 million units of chemicals.
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36 million units of chemicals.
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48 million units of chemicals.
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