Figure 16.1 Import Tariff Levied by Venezuela

-Consider Figure 16.1. With free trade, Venezuela produces ______, consumes ______, and imports ______.

Question

Figure 16.1 Import Tariff Levied by Venezuela
 
-Consider Figure 16.1. With free trade, Venezuela produces ______, consumes ______, and imports ______.

Quizplus · Accepted Answer

With free trade, a country will produce at its comparative advantage and consume at a level determined by world prices, importing the difference between its consumption and production. Choice B correctly shows Venezuela producing a smaller amount (10 calculators), consuming a much larger amount due to access to the global market (110 calculators), and thus importing the difference (100 calculators) to meet its consumption needs.