Question 1
Assume that Blade Runner specializes in producing in-line skates and Hang Ten specializes in producing surfboards. After trade Blade Runner exports 800 pairs of in-line skates and imports 200 surfboards. The terms of trade
◦ are 1:4 in-line skates to surfboards.
◦ are 4:1 in-line skates to surfboards.
◦ are 1/4:1 in-line skates to surfboards.
◦ cannot be determined from this information.
Question 2
When trade is free, patterns of trade and trade flows result from
◦ the collective decisions of a few importers and exporters, as well as the governments of the countries in which they reside.
◦ the collective decisions of a few importers and exporters, as well as millions of private households and firms.
◦ the independent decisions of thousands of importers and exporters, as well as millions of private households and firms.
◦ the independent decisions of thousands of importers and exporters, as well as the governments of the countries in which they reside.
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