With No Trade, the Equilibrium Price of Grapes Is $2

question 22

Multiple Choice

With no trade, the equilibrium price of grapes is $2 per pound in Macroland and $4 per pound in Econoland. After trade opens between the two countries, the price of grapes increases to $3 per pound in both countries. Which statement explains who gains and who loses when this happens?

• A) Winners include consumers in both countries, grape producers in Macroland, and farm workers in Econoland. Losers include grape producers in Econoland and farm workers in Macroland.
• B) Winners include grape producers in both countries, consumers in Econoland, and farm workers in Macroland. Losers include consumers in Macroland and farm workers in Econoland.
• C) Winners include consumers, grape producers, and farm workers in Econoland. Losers include consumers, grape producers, and farm workers in Macroland.
• D) Winners include consumers in Econoland, and grape producers and farm workers in Macroland. Losers include consumers in Macroland, and grape producers and farm workers in Econoland.

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Definitions:

Cycles Per Second

A measurement of frequency, now replaced by the Hertz (Hz), indicating the number of complete oscillations or cycles of a wave in one second.

Hz

Hertz, a unit of frequency defined as one cycle per second, used to measure the frequency of waves, including sounds and electromagnetic waves.

Spoken Language

The use of sounds and words for communication, a fundamental aspect of human interaction and culture.

Audition

The sense of hearing, or the process by which sound waves are transformed by the auditory system into neural signals the brain interprets as sound.