Refer to the information provided in Table 33.3 below to answer the question(s) that follow.
Table 33.3
-Refer to Table 33.3. If the exchange rate is $1 = 2 euros, then
A) the United States will import both raspberries and chocolate.
B) Belgium will import both raspberries and chocolate.
C) the United States will import raspberries and Belgium will import chocolate.
D) Belgium will import chocolate.

Question

Refer to the information provided in Table 33.3 below to answer the question(s) that follow.
Table 33.3 
-Refer to Table 33.3. If the exchange rate is $1 = 2 euros, then
A) the United States will import both raspberries and chocolate. 
B) Belgium will import both raspberries and chocolate. 
C) the United States will import raspberries and Belgium will import chocolate. 
D) Belgium will import chocolate.

Quizplus · Accepted Answer

According to the table, Belgium has a comparative advantage in producing chocolate with a lower opportunity cost of 1.5 units of raspberries per unit of chocolate, while the United States has a comparative advantage in producing raspberries with a lower opportunity cost of 0.67 units of chocolate per unit of raspberries. Therefore, if the exchange rate is $1 = 2 euros, then it would be cheaper for the United States to import raspberries from Belgium at a price of 1 euro per unit, and for Belgium to import chocolate from the United States at a price of 2 dollars per unit. Therefore, the United States will import raspberries and Belgium will import chocolate.

Refer to the Information Provided in Table 33