Home Has a Comparative Advantage in Wheat, and Foreign Has

question 61

Multiple Choice

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. Suppose that Home's trade 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. We conclude that the change in Home's export price means that Home was worse off in 2010 than it was in 2009. Which of the following statements best explains this conclusion?

• A) Home had to export twice as much wheat to obtain a yard of cloth in 2010 as it did in 2009.
• B) Home had to export half as much wheat to obtain a yard of cloth in 2010 as it did in 2009.
• C) Home had to export the same amount of wheat to obtain a yard of cloth in both 2009 and 2010.
• D) Home had to export three times the amount of wheat to obtain a yard of cloth in 2010 as it did in 2009.

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Definitions:

Subliminal Perception

The process by which individuals can respond to stimuli that are below the threshold of conscious awareness.

Consumer's Awareness

refers to the degree to which consumers understand and have knowledge about products, brands, and the rights and duties of themselves as consumers.

Attention

The cognitive process of selectively concentrating on one aspect of the environment while ignoring other things.

Stimulus

Something that evokes a response or reaction, particularly in the context of sensory input, psychological processes, or behavioral conditioning.