-Suppose the Production Possibilities for Two Countries,producing Either Food or Clothing,are

question 37

Multiple Choice

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Suppose each country is in competitive equilibrium prior to free trade being allowed.Once free trade is allowed,the price of food will be

• A) two times the price of clothing.
• B) equal to the price of clothing.
• C) one-half the price of clothing.
• D) somewhere between one-half the price of clothing and the price of clothing, depending upon the relative bargaining power of the two countries.

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Definitions:

Venustiano Carranza

A leader in the Mexican Revolution who became President of Mexico, serving from 1917 to 1920, and played a key role in drafting the progressive Mexican Constitution of 1917.

Mexican Revolution

A major armed struggle from 1910 to 1920 that radically transformed Mexican culture and government, leading to the end of the dictatorship of Porfirio Diaz.

Controlled Panama

Reference to a period or situation in which Panama was under the control or significant influence of another state or entity, such as U.S. control over the Panama Canal Zone in the 20th century.