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 hats will Belize gain compared to the 'without trade' numbers?
A)-100
B)0
C)150
D)250

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 hats will Belize gain compared to the 'without trade' numbers?
A)-100 
B)0 
C)150 
D)250

Quizplus · Accepted Answer

With the terms of trade of 1 hat for 1.8 clocks, Belize will gain 150/1.8 = 83.33 hats through trade. This is an increase from the "without trade" consumption of 33 hats for Belize. Therefore, Belize gains 83.33 - 33 = 50.33 hats compared to the "without trade" numbers. Rounded to the nearest whole number, this is 50 hats. Therefore, Belize gains 50 hats through trade, bringing their total hat production and consumption to 83 hats.

Table 13.6 Production and