Assume That Two Countries (Home and Foreign) Each Produce Two

question 62

Multiple Choice

Assume that two countries (Home and Foreign) each produce two goods
(corn and wheat) under constant cost production.Home produces 0.5
Ton of corn or a ton of wheat with a day of labor.Foreign produces a ton
Of corn and 0.5 ton of wheat.Without trade (in autarky) , Home's daily
Production is 20 tons of wheat and 10 tons of corn.At which
International price will Home's gains from trade be largest?

• A)0.5 ton of wheat per ton of corn
• B)1 ton of wheat per ton of corn
• C)1.5 tons of wheat per ton of corn
• D)2 tons of wheat per ton of corn

---

Definitions:

Dish Soap

A cleaning product used to wash dishes, cut through grease, and sanitize kitchenware.

Income

Earnings acquired, frequently on a steady basis, through employment or investing activities.

Consumer Equilibrium

The point at which the quantity of goods and services a consumer chooses to buy equates to the maximum satisfaction or utility for their budget.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford based on their income and the prices of goods.