Table 13.6
Production and
Consumption Production
Without Trade With Trade Denmark and Belize can produce both clocks and hats.Table 13.6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 13.6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many clocks will Denmark consume?
A)270
B)900
C)930
D)1200

Question

Table 13.6
Production and
Consumption Production
Without Trade With Trade  Denmark and Belize can produce both clocks and hats.Table 13.6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 13.6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many clocks will Denmark consume?
A)270 
B)900 
C)930 
D)1200

Quizplus · Accepted Answer

To determine how many clocks Denmark will consume, we need to first calculate how many hats they will export in exchange for clocks.
If 150 hats are traded, Denmark will export 150 hats * 1.8 clocks/hat = 270 clocks.
With trade, Denmark can produce 900 clocks and 500 hats, resulting in a total supply of 1370 units.
Denmark will consume the remaining units after trade, which is 1370 total units - 270 exported clocks - 230 consumed hats = 870 clocks.
Thus, the answer is C) 930 clocks.

Table 13.6 Production and