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 Belize gain compared to the 'without trade' numbers?
A)-100
B)100
C)120
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 clocks will Belize gain compared to the 'without trade' numbers?
A)-100 
B)100 
C)120 
D)250

Quizplus · Accepted Answer

Belize would gain 120 clocks compared to the 'without trade' numbers because with the actual terms of trade being 1 hat for 1.8 clocks, trading 150 hats would result in receiving 270 clocks (150 hats * 1.8 clocks/hat). Without trade, those 150 hats would have only been equivalent to 150 clocks (1 hat = 1 clock in the domestic scenario). Therefore, the gain is 270 - 150 = 120 clocks.

Table 13.6 Production and