Consider the no-trade input/output situation presented in the following table and graph for South and North Carolina.Assume that free trade is legal. Input/Output without Trade

country

south carolina north carolina total

I. total potintal output

(lbs. or yard; 000,000s)

guns 500 250 750

butter 1,000 750 1,750

II. consumption

(lbs. or yard; 000,000s)

guns 250 200 450

butter 500 150 650

What is the relative price of a gun in terms of butter in South Carolina? A)1 gun costs 3 pounds of butter. B)3 guns cost 1 pounds of butter. C)1 gun costs 2 pounds of butter. D)2 guns cost 1 pounds of butter.

Question

Consider the no-trade input/output situation presented in the following table and graph for South and North Carolina.Assume that free trade is legal. Input/Output without Trade

		country
	south carolina	north carolina	total
I. total potintal output
(lbs. or yard; 000,000s)
guns	500	250	750
butter	1,000	750	1,750
II. consumption
(lbs. or yard; 000,000s)
guns	250	200	450
butter	500	150	650

What is the relative price of a gun in terms of butter in South Carolina? A)1 gun costs 3 pounds of butter. B)3 guns cost 1 pounds of butter. C)1 gun costs 2 pounds of butter. D)2 guns cost 1 pounds of butter.

Quizplus · Accepted Answer

The relative price of a gun in terms of butter in South Carolina can be determined by comparing the potential output ratios of guns to butter. South Carolina can produce 500 guns or 1,000 pounds of butter. Therefore, the cost of 1 gun in terms of butter is 1,000 butter / 500 guns = 2 pounds of butter per gun.

Consider the No-Trade Input/output Situation Presented in the Following Table