JNU SSS 2019 Question 46: Theories of international trade
Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Sylvania will now be able to consume a maximum of:
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Theories of international trade has come up 151 times in 6 exams since 2006.
What this question tests
This question is on Specialisation and the gains from trade, part of Theories of international trade in International Economics.
How specialisation raises consumption possibilities, including complete and incomplete specialisation.
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