Assume That the World Economy Consists of Two Countries: Russia

question 25

Multiple Choice

Assume that the world economy consists of two countries: Russia and Republic of Belarus. Each country can produce tomatoes and potatoes. Russia can produce 1000 tons of tomatoes or 3000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 3 × tomatoes = 3000. Republic of Belarus can produce 500 tons of tomatoes or 1000 tons of potatoes or any linear combination of tomatoes and potatoes that satisfies potatoes + 2 × tomatoes = 1000. Countries can freely trade with each other.
-If the price of potatoes is $300 per ton,with free trade the price of tomatoes can be any of the numbers below EXCEPT

• A) $600
• B) $750
• C) $900
• D) All of these numbers can be the equilibrium price of tomatoes

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Definitions:

Calorie Limit

A nutritional guideline specifying the maximum number of calories to be consumed in a day to maintain or achieve certain health goals.

Seafood Salads

A dish made primarily of various types of seafood and mixed with vegetables, dressings, or other ingredients, often served cold.

Budget Set

The collection of all possible combinations of goods and services that a consumer can afford with a given budget at current prices.

Price Reduced

A decrease in the cost at which goods or services are sold, typically to stimulate demand or clear inventory.