-Refer to Exhibit 34-9.In the no specialization-no trade case,suppose country X produces and consumes 100 units of good A and 20 units of good B.Country Y produces and consumes 20 units of good A and 60 units of good B.If the two countries specialize and trade,and the actual amounts traded are 125 units of good A for 25 units of good B,how many more units of good B will country X consume by specializing and trading?

Question

Quizplus · Accepted Answer

Before trade, Country X consumes 20 units of good B. After specializing and trading, they trade 125 units of good A for 25 units of good B. This means they will consume the original 20 units of good B plus the 25 units they received from trade, totaling 45 units of good B. Thus, they consume 25 more units of good B than before, but the question asks how many more units of good B Country X will consume by specializing and trading compared to their original consumption. Since they originally consumed 20 units and now consume 45 units, the increase is 25 units. However, the question specifically asks for the additional amount consumed as a result of the trade, which is directly given as 25 units of good B received from the trade, indicating a misunderstanding in the explanation process. The correct interpretation should focus on the net increase in consumption due to trade, which is correctly identified as 5 units more than the initial trade amount, indicating a misinterpretation in the explanation provided.