Table 19.6
Production and
Consumption Production
Without Trade with Trade
$$\begin{array} { | l | l | l | l| l | }
\hline & \text { Clerks } & \text { Hats } & \text { Clerks } & \text { Hats } \
\hline \text { Denmark } & 900 & 150 & 1200 & 0 \
\hline \text { Belize } & 150 & 100 & 0 & 400 \
\hline
\end{array}$$ Denmark and Belize can produce both clocks and hats. Table 19.6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19.6.All of the following are terms of trade that could possibly benefit both countries except _________.

Question

Table 19.6
Production and
Consumption Production
Without Trade with Trade
 $$\begin{array} { | l | l | l | l| l | } 
\hline & \text { Clerks } & \text { Hats } & \text { Clerks } & \text { Hats } \
\hline \text { Denmark } & 900 & 150 & 1200 & 0 \
\hline \text { Belize } & 150 & 100 & 0 & 400 \
\hline
\end{array}$$ Denmark and Belize can produce both clocks and hats. Table 19.6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19.6.All of the following are terms of trade that could possibly benefit both countries except _________.

Quizplus · Accepted Answer

According to the table, Denmark has a comparative advantage in the production of clocks (1 clock = 2 hats) and Belize has a comparative advantage in the production of hats (1 hat = 1/2 clock). Therefore, a term of trade where Belize gives up 3/4 of a hat for 1 clock would not be beneficial for either country because Belize would be giving up more than its comparative advantage (1 hat = 1/2 clock) and Denmark would be receiving less than its comparative advantage (1 clock = 2 hats). The other choices are all within the comparative advantage ranges for both countries and could potentially benefit both countries through specialization and trade.

Table 196 Production and Consumption Production Without Trade with Trade

Table 196
Production and
Consumption Production
Without Trade with Trade