SCENARIO: RELATIVE PRICES AND TRADE LEVELS
Home has a comparative advantage in wheat, and Foreign has a
Comparative advantage in cloth.Once trade occurs, Home produces
1,000 bushels of wheat, and Foreign produces 1,000 yards of cloth.The
Following table shows the amount of wheat that Home is willing to supply
And Foreign is willing to buy at various international prices.
(Scenario: Relative Prices and Trade Levels) How many bushels of wheat
Will Foreign import?
A)900 bushels
B)700 bushels
C)500 bushels
D)300 bushels

Question

SCENARIO: RELATIVE PRICES AND TRADE LEVELS
Home has a comparative advantage in wheat, and Foreign has a
Comparative advantage in cloth.Once trade occurs, Home produces
1,000 bushels of wheat, and Foreign produces 1,000 yards of cloth.The
Following table shows the amount of wheat that Home is willing to supply
And Foreign is willing to buy at various international prices. 
(Scenario: Relative Prices and Trade Levels) How many bushels of wheat
Will Foreign import?
A)900 bushels 
B)700 bushels 
C)500 bushels 
D)300 bushels

Quizplus · Accepted Answer

Foreign will import wheat from Home when the international price of wheat is lower than their domestic price for producing wheat. Looking at the table, we can see that at an international price of $1.00 per bushel, Home is willing to supply 600 bushels and Foreign is willing to buy 500 bushels. Therefore, 500 bushels of wheat will be imported by Foreign.