Answer to Question #283657 in Economics for Hafsa

Question

4. Suppose that in Case B in Table 2.5 the United

States exchanges 4W for 4C with the United

Kingdom.

(a) How much does the United States gain in

terms of cloth?

(b) How much does the United Kingdom gain in

terms of cloth?

(c) What is the range for mutually beneficial

trade?

(d) How much would each nation gain if they

exchanged 4W for 6C instead?

Answer 1

In case B the US produces 4W or 3C and UK produces 1W or 2C.

a) The United States gains 1C.

b) The United Kingdom gains 4C.

c) 3C < 4W < 8C.

d) The United States would gain 3C while the United Kingdom would gain 2C.