Home has a comparative advantage in wheat, and Foreign has a comparative advantage in cloth. Once trade occurs, Home produces 1,000 bushels of wheat, and Foreign produces 1,000 yards of cloth. The following table shows the amount of wheat that Home is willing to supply and Foreign is willing to buy at various international prices. What is the international price of wheat?
A) 1 yard/bushel
B) 3 yards/bushel
C) 5 yards/bushel
D) 7 yards/bushel

Question

Home has a comparative advantage in wheat, and Foreign has a comparative advantage in cloth. Once trade occurs, Home produces 1,000 bushels of wheat, and Foreign produces 1,000 yards of cloth. The following table shows the amount of wheat that Home is willing to supply and Foreign is willing to buy at various international prices.  What is the international price of wheat?
A) 1 yard/bushel 
B) 3 yards/bushel 
C) 5 yards/bushel 
D) 7 yards/bushel

Quizplus · Accepted Answer

The Answer of Home has a comparative advantage in wheat, and Foreign has a comparative advantage in cloth. Once trade occurs, Home produces 1,000 bushels of wheat, and Foreign produces 1,000 yards of cloth. The following table shows the amount of wheat that Home is willing to supply and Foreign is willing to buy at various international prices.  What is the international price of wheat?
A) 1 yard/bushel 
B) 3 yards/bushel 
C) 5 yards/bushel 
D) 7 yards/bushel

Home Has a Comparative Advantage in Wheat, and Foreign Has