Given the Information in the Table Above, If the Home

question 7

Multiple Choice

Given the information in the table above, if the Home economy suffered a meltdown, and the Unit Labor Requirements doubled to 20 for cloth and 40 for widgets then home should

• A) export cloth.
• B) export widgets.
• C) export both and import nothing.
• D) export and import nothing.
• E) export widgets and import cloth.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers at various price levels.

Consumer Surplus

The divergence between the aggregate amount consumers are willing and have the means to pay for a good or service, and what they truly pay.

Producer Surplus

The disparity between what sellers are ready to take for a product or service and the actual amount they get.

Minimum Imposed Price

A price floor set by the government or other regulatory body, above the equilibrium price, to prevent prices from falling too low.