SCENARIO: PRODUCTION IN NORWAY
Suppose that Norway is a small country and currently produces 100,000
Board feet of lumber at $600 per 1,000 board feet.Then it begins to trade
At the world price of $500 per 1,000 board feet.As a result of trade,
Norway's production falls to 50,000 board feet and its consumption
Increases to 200,000 board feet.
Reference: Ref 82
(Scenario: Production in Norway) How many board feet of lumber does
Norway now import?
A)250,000 board feet
B)200,000 board feet
C)150,000 board feet
D)100,000 board feet

Question

SCENARIO: PRODUCTION IN NORWAY
Suppose that Norway is a small country and currently produces 100,000
Board feet of lumber at $600 per 1,000 board feet.Then it begins to trade
At the world price of $500 per 1,000 board feet.As a result of trade,
Norway's production falls to 50,000 board feet and its consumption
Increases to 200,000 board feet.
Reference: Ref 8­2
(Scenario: Production in Norway) How many board feet of lumber does
Norway now import?
A)250,000 board feet
B)200,000 board feet
C)150,000 board feet
D)100,000 board feet

Quizplus · Accepted Answer

Before trade, Norway was producing 100,000 board feet and consuming 100,000 board feet (since production = consumption). After trade, production falls to 50,000 board feet and consumption increases to 200,000 board feet. Therefore, Norway must import the difference between its production and consumption, which is 150,000 board feet (200,000 - 50,000). Therefore, the correct answer is C)150,000 board feet.