Canada produces both lumber and wine.Canada exports lumber and imports wine.The rest of the world imports Canadian lumber and exports wine to Canada.If Canada did not trade with the rest of the world,then the equilibrium price of lumber would be ________ in Canada than the rest of the world,and the equilibrium price of wine would be ________ in Canada than the rest of the world.

Question

Quizplus · Accepted Answer

If Canada did not trade with the rest of the world, it would have excess supply of lumber and no wine. This would cause the price of lumber to decrease (lower) in Canada as there would be less demand for it, while the price of wine would increase (higher) in Canada as there would be no supply. Therefore, the equilibrium price of lumber would be lower in Canada than the rest of the world, and the equilibrium price of wine would be higher in Canada than the rest of the world.

Canada Produces Both Lumber and Wine