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 pound of butter in terms of guns in North Carolina? A)1 pound of butter costs 0.33 guns. B)1 gun costs 0.33 pounds of butter. C)1 pound of butter costs 0.66 guns. D)2 guns costs 0.66 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 pound of butter in terms of guns in North Carolina? A)1 pound of butter costs 0.33 guns. B)1 gun costs 0.33 pounds of butter. C)1 pound of butter costs 0.66 guns. D)2 guns costs 0.66 pounds of butter.

Quizplus · Accepted Answer

To find the relative price of butter in terms of guns in North Carolina, we need to divide the price of butter by the price of guns. From the table, we see that the price of butter in North Carolina is 0.33 and the price of guns is 1. Therefore, the relative price of butter in terms of guns is:

0.33/1 = 0.33 guns/pound of butter

So, option A is correct.

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