SCENARIO: HOME'S WILLINGNESS TO TRADE WHEAT FOR CLOTH

question 8

Multiple Choice

SCENARIO: HOME'S WILLINGNESS TO TRADE WHEAT FOR CLOTH
Home has a comparative advantage in wheat, and Foreign has a
Comparative advantage in cloth.Once trade occurs, Home produces
1,500 bushels of wheat, and Foreign produces 1,000 yards of cloth.The
Following table shows the amount of wheat that Home is willing to trade
To acquire more cloth.
Reference: Ref 2­13
(Scenario: Home's Willingness to Trade Wheat for Cloth) Suppose that
Home's export price rose from 0.5 bushel of wheat per yard of cloth in
2009 to a bushel of wheat per yard of cloth in 2010.What does this
Movement represent in terms of Home's terms of trade?

• A)It is an improvement in Home's terms of trade.
• B)It is a deterioration in Home's terms of trade.
• C)There is no change in Home's terms of trade.
• D)The answer cannot be determined based on the information provided.

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Definitions:

Morula

An early stage in embryonic development consisting of a solid ball of cells.

Endoderm

The innermost layer of cells or tissue of an embryo in early development, from which the digestive tract and associated structures develop.

Digestive Tract

The digestive tract is a series of hollow organs joined in a long, twisting tube from the mouth to the anus, where food is broken down into nutrients.

Extraembryonic Membranes

Membranes that are not part of the embryo but provide protection and support, including the amnion, chorion, yolk sac, and allantois.