Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats will Belize gain compared to the "without trade" numbers?
A) -100
B) 0
C) 150
D) 250

Question

Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats will Belize gain compared to the "without trade" numbers?
A) -100 
B) 0 
C) 150 
D) 250

Quizplus · Accepted Answer

Belize will gain 150 hats because, with trade, it can get 1.8 clocks for each hat, which is better than its domestic trade-off. This allows Belize to consume more than it could without trade, effectively gaining the equivalent of 150 hats compared to the "without trade" scenario.

Denmark and Belize Can Produce Both Clocks and Hats