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

question 120

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 1 ton of wheat with a day of labor. Without trade (in autarky) , Home's daily production is 20 tons of wheat and 10 tons of corn. Suppose that Home completely specializes, and it consumes 20 tons of wheat after it begins trading with Foreign. Home trades with Foreign at a 1-to-1 ratio of corn for wheat. How many tons of corn does Home consume when it trades with Foreign?

• A) 10 tons of corn
• B) 20 tons of corn
• C) 30 tons of corn
• D) 40 tons of corn

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Definitions:

European Monarch

A sovereign ruler of a European nation, often inheriting their position through royal lineage and ruling for life or until abdication.

Pontiac

An influential leader among the Native American tribes of the Great Lakes region in the 18th century, known for leading a rebellion against the British military presence (1763-1766).

Indian Uprisings

Collective acts of rebellion or resistance by indigenous peoples against colonial or national governments, often to defend their territories, way of life, and rights.