Table 7-6
Output per hour Production and Production
of work Consumption without Trade with Trade
Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 7-6 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 7-6.If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded,how many swords will Morocco gain compared to the "without trade" numbers?
A)0
B)15
C)60
D)75

Question

Table 7-6
Output per hour Production and Production
of work Consumption without Trade with Trade
  Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 7-6 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 7-6.If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded,how many swords will Morocco gain compared to the "without trade" numbers?
A)0 
B)15 
C)60 
D)75

Quizplus · Accepted Answer

Without trade, Morocco can produce 24 swords and 16 belts. With trade, Morocco will produce 15 belts (and 24 swords) in exchange for 22.5 swords (1.5 swords per belt traded x 15 belts traded). So, compared to the "without trade" numbers, Morocco will gain 22.5 swords - 24 swords = -1.5 swords (or 1.5 swords less). Therefore, the answer is B) 15 swords gained compared to the "without trade" numbers.

Table 7-6 Output Per Hour Production and Production