Author Question: Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce ... (Read 105 times)

cartlidgeashley · **on:** Jun 30, 2018

Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples. Which of the following exchange rates between apples and oranges would allow both Alpha and Omega to gain by specialization and exchange?
a. 1 ton of oranges for 1/3 of a ton of oranges
b. 1 ton of apples for 3 1/3 tons of oranges
c. 1 ton of apples for 2 tons of oranges
d. 1 ton of oranges for 0.4 tons of apples

Question 2

If the world price is below the domestic no-trade equilibrium price, then with international trade:
a. the domestic shortage can be eliminated by rationing.
b. the domestic surplus can be consumed at home.
c. the domestic surplus can be exported to the rest of the world.
d. the domestic quantity demanded is equal to that supplied by the world.
e. the domestic shortage can be met by foreign imports.